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for PCS Retirement (Remote)View the full text of this job opportunity

For the 2022-enacted “saver’s match”, Internal Revenue Code § 6433 provides the Treasury pays the credit “as a contribution” to the eligible individual’s applicable retirement savings vehicle. Whether (i) an eligible retirement plan or (ii) an Individual Retirement Account or Individual Retirement Annuity, a plan or an IRA is not an applicable retirement savings vehicle unless it “accepts contributions made under this section[.]” I.R.C. (26 U.S.C.) § 6433(e)(2)(C) https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap65-subchapB-sec6433.htm. Could a plan sponsor design a plan not to accept a § 6433 contribution? If so, what factors might influence a plan sponsor’s decision-making about whether to allow or refuse saver’s-match contributions? A § 6433 contribution gets some treatments and restrictions that could be different from those of other elective-deferral amounts. Does this affect anyone’s analysis and decision-making? Accepting saver’s-match contributions likely requires yet more separate subaccounting. Does that affect decision-making? Imagine a plan easily would meet all coverage and nondiscrimination conditions without accepting § 6433 contributions. Might that affect decision-making? What else should an employer—or a service provider—think about?

for Ameritas (Remote / Lincoln NE)View the full text of this job opportunity

for Ameritas (Remote)View the full text of this job opportunity

As mentioned above: “If the administrator finds the worker is ineligible, the plan’s sponsor might consider whether applying the plan as written might result in a failure of a tax-qualification condition, including those about coverage and nondiscrimination. If so, and if the plan’s sponsor prefers a tax-qualified plan, the plan’s sponsor might consider a retroactive amendment to increase coverage.”

I assume both plans have a 12/31 plan year end. If so, unless you are able to permissively aggregate the plans under 1.410(b)-7(d)(5) and, therefore, treat the plan merger as if it had occured on the first day of the plan year, the coverge testing for the seller's plan prior to the plan merger must be conducted by including all otherwise eligible employees in the controlled group. This is because, according to the fact pattern, the 410(b) transition rule does not apply.

for Ubiquity Retirement + Savings (Remote)View the full text of this job opportunity

Is the change really retroactive for the entire plan year under D4 of IRS Notice 2016-16 if the matching contribution is trued-up for a portion of the year and then based on payroll by payroll for the remaining portion?

Many retirement plans’ governing documents include a definition or provision that a worker is not an employee for the retirement plan unless the service recipient classifies the worker as an employee. That can be so even if the service recipient’s classification of a worker as not an employee is contrary to all public laws. If you have an owner only plan and the DOL has stated for unemployment insurance purposes your independent contractor is really an "employee" beginning in 2023, you are suggesting that one possible option is to look at the terms of the plan document to determine if there is either a Microsoft carveout or if there is a plan document definition of "employee" or employee classification would somehow preclude including this employee in the plan? No matter what the plan document says, if this employer has agreed to the DOL's position that the service provider is an employee (as evidenced by the fact that they agreed to pay back-taxes for employment and report him on a W-2 on a going forward basis) that is pretty strong evidence that the service provider has been since at least 2023, a common law employee under state law. The plan will fail 410(b) coverage by excluding him from the plan.

Before considering other steps, the plan’s administrator (even if that is the same person as the plan’s sponsor) might, with its lawyer’s advice, consider whether the worker was or is eligible for the retirement plan. That a worker is, or is treated as, an employee under one or more public laws, even a Federal law, does not—at least not by itself—mean the worker is an eligible employee, or even an employee, within the meaning of a retirement plan’s definitions and provisions. Consider also that if ERISA’s title I governs the plan, ERISA supersedes and preempts the legal effect of a State agency’s finding that a worker is or is not an employee. Or, if a plan is not ERISA-governed, the plan might be governed by the internal laws of a State other than the State that made a finding about who is or is not an employee. Or, the plan’s provisions might make a State agency’s finding—even if the same State’s law governs the plan—unimportant or even irrelevant. Many retirement plans’ governing documents include a definition or provision that a worker is not an employee for the retirement plan unless the service recipient classifies the worker as an employee. That can be so even if the service recipient’s classification of a worker as not an employee is contrary to all public laws. (Some lawyers started writing plans this way beginning in 1974; others began soon after reading Vizcaino v. Microsoft Corp., 120 F.3d 1006, 21 Empl. Benefits Cas. (BL) 1273 (9th Cir. July 24, 1997) (After finding that a class of workers Microsoft had treated as nonemployees had been employees, the appeals court remanded to the trial court the question of what benefit ought to have been provided under a non-ERISA plan, and remanded to the plan’s administrator questions about what benefit, if any, ought to have been provided under an ERISA-governed plan.). RTFD—Read The Fabulous Document. If the administrator finds the worker is ineligible, the plan’s sponsor might consider whether applying the plan as written might result in a failure of a tax-qualification condition, including those about coverage and nondiscrimination. If so, and if the plan’s sponsor prefers a tax-qualified plan, the plan’s sponsor might consider a retroactive amendment to increase coverage. Further, if a change results in a plan its administrator had reported as not governed by ERISA’s title I having existed as ERISA-governed for a period before 2026, the administrator might consider what Form 5500 reports to amend or make. If it becomes needed or helpful to record the worker’s employment commencement date, might that be the first day the worker first performed an hour of service as an employee (even if that date is before the worker became, or could have become, eligible)? Might that date be even earlier than 2023? This is not advice to anyone.

No. I think you are using a corrected reporting requirement (i.e., on the Form W-2 vs 1099) mid-2025 as the key to when the service provider's classification changed from independent contractor to employee. But, it seems based on what you have stated, the DOL took the position that the service provider has in fact been an "employee" since 2023. The 2023 date is the date the service provider should be treated as an employee for purposes of the retirement plan. I would imagine an exception if the DOL explicitly states that the employer may treat the service provider as an employee on a going forward basis (for the remainder of 2025). I doubt the DOL would offer that concession.

Interesting fact pattern. I'm not sure that one can just ignore a plan document that is intended to be a safe-harbor by stating "oh well," we used a non 414(s) compliant compensation definition, so it's not really a safe harbor, and we will run ADP/ACP. That would constitute an operational failure--not running the plan as a safe-harbor plan. The correction, it would seem to be, is to retroactively amend the plan document to a 414(s) definition that you know will meet a safe-harbor compensation definition (e.g., W-2) and therefore SH compliant, and then make corrective contributions for any potential missed deferral opportunities and safe-harbor contributions under EPCRS. Of course, your idea of just moving on with the ADP/ACP for 2025 would likely be less expensive and for the record, I prefer it. But, it just doesn't feel "right."

Plan is intended to be a safe harbor plan. It defines compensation to exclude bonuses. Most of the time, we would assume this is acceptable under 414(s), because bonuses are typically received disproportionately by HCEs. But due to unusual circumstances, this turned out not to be true for 2025, a fact which they discovered only after 2025 ended. My assumption is that this eliminates safe harbor status for 2025, and that they must now run ADP tests and take the normal steps to correct. But is this correct? "Dropping safe harbor status" is supposed to be prohibited mid-year, but would this be considered dropping safe harbor status or never having had it? And if this would be considered an impermissible dropping of safe harbor status, what would the correction be, anyway? Also, what happens for 2026? Are they precluded from making changes for 2026 on the theory that it is a safe harbor plan for 2026 unless the compensation definition also proves to be discriminatory in 2026? In particular, can they remove a top paid group election from the plan and/or change the definition of compensation for 2026?

We have an owner only plan that recently went through a Department of Labor and Employment Unemployment Insurance Employer Services Audit in 2025. The audit was for 2023. It was determined that the 1 Independent Contractor was actually an employee. The client paid the necessary taxes and began treating them as an employee for the remainder of 2025. So for 2025, the Independent Contractor turned employee received both a 1099 and a W-2. Is it reasonable for the client to list the employee's hire date as the audit close date since this is when the employee began receiving W-2 wages?

A agree that acm_acm laid out a perfectly acceptable method for testing the plans. Test the premerger Plan on its own and the postmerger plan on its own including all participants after the merger. I think another reasonable method since it is a stock acquisition forming a controlled group during the year and not using the transition relief would be to test the plans together as a single aggregated plan for the year. In either even you will have 2 5500s.

for Reid & Riege PC (Hartford CT / Hybrid)View the full text of this job opportunity

Are they already in the same controlled group now? If so, you should read posts like: For part-year participants you would use actual, partial year deferred/contributed amounts and their compensation for the partial year. This "prorates" both so you get to comparable percentages.

We still give the notice even using the Brief Exclusion rule. I did not go back and look for authority...not time right now... perhaps it is just a best practice principle. I mean how does a plan sponsor provide an excluded participant an "opportunity" to make up the missed contributions without providing them notice that something happened.

Thank you. The merging plan will merge mid-year, so I would suspect it needs to be separately tested through the merging date. It's in the same controlled group, however. I think it would be tested for coverage and nondiscrimination on its own (as its own plan, not aggregated with the buyer plan) for the first 8 months. The last four months would be combined with the buyer's plan, but how would they factor the first 8 months? Would they be included in the full plan year numbers, with percentages of actual compensation simply inherent in the testing?

Hello - just wanted some clarification on this issue. A current safe harbor plan provides for an enhanced safe harbor match of 4% and use a payroll computation period. Sponsor wants to increase it this year to 5%. What are the mid year requirements - 30 day notice, the increase must be retroactive to 1/1/26, can the plan do a true up match retro to 1/1 and then continue with the payroll match going forward, or does the match computation period have to change to annual for the remainder of the 2026 plan year? I appreciate your thoughts!

for Michigan State University (East Lansing MI / Hybrid)View the full text of this job opportunity

Each plan would need to satisfy 410(a)(26) independently. If you can get over that hurdle, and satisfy all of the other non-discrimination tests on an aggregated basis, it would be permitted. IOW, you will probably need some NHCEs in the plan with the HCEs in order to meet the 40% rule, unless you have at least 50 HCEs. Then again, if your HCE plan satisfies 401(a)(26), you could use a DC plan to satisfy the NDT and you would not need a second DB plan for the other employees. Nothing wrong with having a second DB plan, but a DC plan would likely be preferred.

Hi, Two corps are a controlled group. Therfore, one DB plan can be opened that will cover both entities. Can the following be done instead? For easier record keeping, etc. Open a DB for each entity and cover each entity separately. The owners (Hcs) are not getting above the 415 as they are covered only in one plan and the employees of each entity are all properly included. Thank you.

No one answered yet, so I'll give you my opinion. It sounds like the merging plan will merge after a complete plan year, but even if a partial plan year, the merging plan has to be tested on its own through August. Kind of like how it will have to file a final Form 5500 for that plan year. The remaining plan gets tested for the full plan year including the new participants for the part of the year they are in the plan (after August). Just like there will be a single 2026 Form 5500, but with an increase in the EOY participant counts to reflect the merged participants. Hopefully others on here can confirm.

Thank you as always CuseFan, David Rigby, and Calavera. I had given a "like" your responses when you had responded, however, I forgot to write this. It was a big help. Thank you