All Activity

In my experience, almost all business lawyers suggest bringing in an employee-benefits lawyer—even when working on a micro deal. Often, a client rejects that advice, does not engage an eb lawyer or consultant, and does not authorize the business lawyer to engage an eb lawyer or consultant. Also, some sellers and some buyers keep the deal-making secret from even one’s regular advisers, including some who might bill nothing for useful help. Bad consequences result, but it might not be the fault of a lawyer or other professional.

Entirely unacceptable, whether or not (as @Peter Gulia correctly points out) the transaction was "whole" or "partial". The most obvious issue: if there are unvested $$, the seller should have either (1) amended prior to the sale to provide 100% vesting for all current participants, or (2) included a similar provision in the buy/sell agreement. This issue has been on the radar screen of benefit professionals and attorneys for decades, so omission is unconscionable. There may be other similar issues, e.g., (a) modifying the participation requirement if current (non-participant) employees might be affected; (b) nature and responsibility of employee communication; (c) identifying responsibility for govt filings; (d) are there any non-qualified benefit plans; etc. If a stock sale (implied but not certain in the original post) and the seller was worried about inheriting liability, then the seller's advisors (legal and/or benefit consultant) were asleep at the wheel. Probably also the buyer's advisors.

I hope your seventh book will be the music notation and lyrics of your songs about the law of retirement plans.

Controls about identity or authority might call for different methods when none of the communication is face-to-face.

If the buyer bought shares, LLC interests, or partnership interests of the seller organization such that the buyer now governs the seller organization, the buyer may decide what to do with the seller organization’s retirement plan. If the buyer bought assets from the seller organization (and not shares or other interests of the seller organization), the seller organization, acting by whoever has power to act for it, decides what to with its retirement plan. This is not advice to anyone.

for MVP Plan Administrators, Inc. (Remote)View the full text of this job opportunity

Thank you! I thought we didn't have to include it, but then I started second guessing myself. Very much appreciated

for Nova 401(k) Associates (Remote)View the full text of this job opportunity

If the documents governing the plan provide no more than is needed to meet § 401(a)(9): “The account balance is increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. For this purpose, contributions that are allocated to the account balance as of dates in the valuation calendar year after the valuation date, but that are not actually made during the valuation calendar year, may be excluded.” 26 C.F.R. § 1.401(a)(9)-5(b)(2)(i) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-5#p-1.401(a)(9)-5(b)(2)(i).

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

If the key reason your client is thinking of dissolving a company is so the company and other business organizations are not treated as one § 414 employer, your client might reevaluate. In 2001, Congress recognized that an employer’s contribution to a retirement plan for a household employee is nondeductible if the contribution is not made for a trade or business. See Internal Revenue Code of 1986 (26 U.S.C.) § 4972(c)(6)(B) https://www.govinfo.gov/content/pkg/USCODE-2023-title26/pdf/USCODE-2023-title26-subtitleD-chap43-sec4972.pdf. I.R.C. § 414(c) refers to “employees of trades or businesses (whether or not incorporated) which are under common control[.]” If the LLC and its household employee do no work for a trade or business, there might be no need to treat the LLC as a part of the same employer as the businesses the owner controls. Consider whether the LLC might establish a § 408(k) SEP or a § 408(p) SIMPLE for its household employee. As always, get one’s lawyers’ advice. This is not advice to anyone.

Not a CG on the face of it. But there could be other factors, like options to purchase the stock, etc., so recommend that they check with their attorney.

Hi, I have a question about a Controlled Group relationship. A sponsor owns two companies: A and B. For company A, she has a 401(k) Plan and there is no 401(k) Plan for company B. Company B is currently an LLC (that she also owns 100% of) where she has 1 household employee. She is thinking of dissolving the LLC to avoid the 2 companies being in a Controlled Group relationship. According to the plan sponsor, the household employee (at Company B) is not part of a trade or business (and their payroll and any 401k contributions would not be tax deductible) so they believe the household employee would not need to be covered by the Company A's 401(k) Plan if the LLC is dissolved. "Reading from IRC 414: (c)Employees of partnerships, proprietorships, etc., which are under common control (1)In general Except as provided in paragraph (2), for purposes of sections 401, 408(k), 408(p), 410, 411, 415, and 416, under regulations prescribed by the Secretary, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer." Is this still a Controlled Group relationship and would the household employee from Company B need to be covered by Company A's 401(k) Plan.

I tried to find this, but couldn't seem to. If an owner is RMD eligible, actively working and receiving a Profit Sharing contribution for his 12/31 balance do you use: 1) The Investment Balance 2) The Investment Balance + any Receivable contributions made after the close of the year I just wanted to be 100% sure, as I'm started to confuse myself. Thanks everyone!

I keep overthinking this because I've heard two different answers. Thoughts on if this is a controlled group? Comp A - husband A 51%, wife A 49% Comp B - husband A 24%, wife A 26%, husband B 24%, wife B 26%

A small business sells to a larger business. The new owners have their own 401k plan. The small business 401k plan and business fiscal year are 7/1 - 6/30. The business was sold on October 1. The status of the small biz 401k plan was not addressed in the sales agreement (crazy, i know. We just found out about the sale today, almost 2 months later). Theres more involved but an initial question: Who would make the decisions on if/when to terminate the small biz 401k (I do not believe a plan merger is being considered)? The plan document and trust agreement still show the small biz owners as the trustee. Thank you

for EPIC RPS (Remote / Norwich NY)View the full text of this job opportunity

I would like to make one comment to this statement to confirm my understanding. I agree that the timing is irrelevant. However, I don't believe the Final Regulations change the nature of a catch-up. Meaning a catch-up is still an amount that exceeds a limit, but any Roth deposit may satisfy the requirement. For example, let's say a 401k plan document is written to not match catch-up contributions. In January 2026, a participant (age 55) funds $8,000 Roth and $0 pre-tax February - December the participant funds $24,500 pretax. $0 Roth The Roth dollars satisfy the rule, but they are not catch-up dollars. The final $8,000 pre-tax dollars are still the catch-up dollars and stay as pre-tax. Therefore if a plan uses a pay period match formula, the Roth dollars are matched, the final $8,000 of pre-tax is not. This may be semantics, but I would change the statement to say: The first Roth dollar deposited can be used to satisfy the Roth catch-up requirement.

Comments from @Paul I are reasonable. and helpful. There may be another situation to consider (and prepare for). Maybe the participant is "incapacitated", and the caller was a relative (perhaps an adult child) who is assisting with a legitimate disbursement. Imagine, for example, that the participant has some cognitive issues, but there is not (yet) any formal diagnosis or power of attorney to allow the adult child to take unilateral action. Of course, it's also possible that it's both: a relative who is "helping" and also committing fraud. Use your imagination to include any other scenarios that might require the plan sponsor to be wary and/or know what steps are required.

Pam, thank you for your input and comments.

Derrin, I’m so very grateful for everything you’ve done for the retirement community and, especially for me. Without you (and Doug Jolley), I can’t imagine having survived the early difficulties in what became my career. Starting my own business way before it was rational to do so, I leaned rather heavily on PIX just to keep my head above water. Thank you, though that is woefully inadequate.

I believe that is in the case where the required minimum contribution exceeds the sole-props Schedule C net income, and not all cases where the employer simply makes a contribution larger than the maximum deductible amount.

I agree with Paul's suggestions. Take reasonable precautions to prevent fraud since it is already suspected in this case.

Jayasar, you are correct. 1. Highly Paid Individuals for 2026 are those that earned more than $150,000 (indexed) in 2025, based on FICA wages (Box 3 of W-2). It is a lookback provision. 2. Those without W-2 wages (i.e. sole props, partners) are currently exempt from having to make catch-up as Roth. 3. Roth provisions must be in place before the first Roth contribution. The timing of the Roth catchup contribution is irrelevant. The first Roth dollar deposited can be counted as Roth catchup. The participant does not need to exceed the 402(g) limit for the contribution to be counted as catch-up. 4. One note of caution if you have HPIs that solely earn W-2 and are not HCEs: if the plan does not permit Roth and the HCEs get to make catchups (pre tax) because they don't earn W-2, but the HPIs are prevented from catchups, then you have a benefits, rights and feature issue. In your example, since owner makes $50k in W-3 income, they are not subject to the Roth Catchup requirement.

Since there are very good reasons to be suspicious of the request, you and the plan's fiduciaries need to protect the plan from potential fraud. Otherwise, if the request is fraudulent, then there will be a lot of finger-pointing (and potentially litigation) about who will make the plan and participant whole. If there is a concern about inviting the individual into your office or the client's office, consider choosing a public, safe place to meet. This could be at a bank or even at a police station, depending upon the level of concern. The purpose is to arrange for a notary or plan representative to validate the individual's identity. Ideally, someone who could recognize the participant could be available. If the level of concern is at the level that the plan fiduciaries are comfortable just having an election form notarized without their being present, then consider listing on the document being notarized specific items for the notary to confirm was presented at the signing. This could be at least one item with a picture (like a driver's license), and any additional documents that would acceptable like an original Social Security Card, Medicare ID or something similar. Ultimately, it is the plan fiduciaries call on how to approach the issue, but you need to make it abundantly clear to them that you believe additional steps need to be taken to confirm the participant's identity. We have not dealt with this particular set of circumstances, but have had a couple of incidents where we expressed our concerns to the plan fiduciaries and worked with them to document the participant's identity to their satisfaction. These are just some thoughts and is not advice to anyone.