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RatherBeGolfing, thank you. It was filed with the efast system and not a 3rd party software. They gave me an option to press submit, and file it, with the error. After hitting submit, they said it t was successfully received.

A 401(k) plan allows for Roth contributions. It also contains a provision limiting deferrals to 10% of participant compensation. A participant contributes 12% of their pay in both ED (pre-tax) and Roth throughout the year (1/1/2025 through 12/31/2025). It is now just discovered and deemed an operational failure for not following the terms of the plan document. The plan document does not outline how this should be corrected. The plan sponsor is self-correcting under EPCRS. Is there any guidance on how to determine what excess to refund? (given that the participant deferred both pre-tax and Roth) Is it last in - first out? Is it prorated somehow? Or is there no guidance on this and the plan sponsor should just choose something and be consistent?

Yes, if someone gets employer contributions in a year that are equal to their 415(c) limit of the lesser of 100% of pay or $72,000, then any and all deferrals would be deemed catch-up contributions. In your example, the person could actually have had compensation of $72,000, an employer contribution of $72,000, and $8,000 in catch-up contributions.

Background: Non-Electing 403(b)(9) Church Plan 2026 Limits apply Participant age 50 Includible Compensation = $80,000 Deferrals = $8,000 Employer Contributions = $72,000 Question: I will admit this seems so basic, but for some reason I am feeling perplexed today (sigh). Perhaps my understanding has been wrong all along, but I was originally under the impression that one did not have catch-up contributions until he/she exceeded the 402(g) limit. Is there any instance where the employee deferrals in this scenario would be considered as age-50 catch-up contributions, avoiding an excess contribution scenario? Does the timing/order of the contributions matter? (For example, if first the employer contributions were made and maxed out the 415(c) limit, could deferrals made after that count as catch-up contributions?) I read through section 414v and became confused by it stating [paraphrased], catch contributions are deferrals made that exceed ANY of the applicable limits, of which include limit on elective deferrals OR annual additions. In the scenario above, he exceeded the 415(c) limit with employer contributions. Does that point alone justify future deferrals in that year as catch-up? "With respect to an applicable employer plan, catch-up contributions are elective deferrals made by a catch-up eligible participant that exceed any of the applicable limits set forth in paragraph (b) of this section ... paragraph (b): (b) Elective deferrals that exceed an applicable limit—(1) Applicable limits. An applicable limit for purposes of determining catch-up contributions for a catch-up eligible participant is any of the following: (i) Statutory limit. A statutory limit is a limit on elective deferrals or annual additions permitted to be made (without regard to section 414(v) and this section) with respect to an employee for a year provided in section 401(a)(30), 402(h), 403(b), 408, 415(c), or 457(b)(2) (without regard to section 457(b)(3)), as applicable. TIA

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See what I mean? Just kidding, Peter - that's good stuff - thank you.

@SSRRS Did you file using third party software (FIS, FTW, etc...)? Did you get an AckID, or did this prevent you from actually getting it filed? While I agree it sounds like an error on their end, it will probably take quite a bit of back and forth to get it resolved.

If ficuciaries put something in meeting minutes stating why they choose the target date suite and ages, claim that they believe it's reasonable and appropriate based on its workforce demographics and other observations, and demonstrate monitoring ahead, my wild guess is that would be good enough and more than most plans do. I wouldn't be too specicfic in the minutes or fiduciaries could paint themselves into a corner.

Hi, Thank you as always for all the insights. The 5500 for a 6/30/2025 plan year end, is due by 1/31/26. This came out on Saturday. Therefore, the 5500 and the 5558 must be filed ON or prior to 2/2/26 (since 2/1 26 was a Sunday). We filed the 5558 on 2/2/26 ( today) with I file and got a validation error that stated " you have filed the form 5558 after the return's normal due date and may not be approved for an extension based on this form 5558 that was submited". I hope this is an error on their part and the extension will be approved? Thank you

Hoping that Mike Johnson doesn't see his shadow and give us 6 weeks of government shutdown!

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A plan that tax law classifies as a profit-sharing plan, whether it includes or omits a § 401(k) cash-or-deferred arrangement, is a pension plan if one follows ERISA title I’s definitions. ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A) https://www.govinfo.gov/content/pkg/USCODE-2023-title29/pdf/USCODE-2023-title29-chap18-subchapI-subtitleA-sec1002.pdf. And while tax law might not distinguish between “solo-k” and some other plan with a § 401(k) arrangement, an investment or service provider’s business classifications can matter greatly to consumers and to their intermediaries and advisers. For example, Individual(k)Ô (Ascensus claims this as a trademark) gets a set of service agreement, trust agreement, plan documents, investment arrangements, and other provisions that’s distinct from other business lines. And differences between a “solo” and a “regular” 401(k) service arrangement can affect even a plan’s provisions. The plan-documents set Ascensus requires for an Individual(k)Ô omits some choices Ascensus allows for other business lines, and imposes some plan provisions Ascensus does not require for other business lines. The sales or business lingo might seem awkward to a tax practitioner, but might convey meaning to consumers, intermediaries, and advisers. For better or worse, “solo 401(k)” now has some trade-usage meaning to describe generally an arrangement a service provider designed for an individual-account (defined-contribution) retirement plan its sponsor intends as one not expected to cover any employee beyond a shareholder-employee or a self-employed deemed employee, or one’s spouse. And that trade-usage meaning includes a sense that investment and service providers offer constrained terms for those plans.

I really am not following everything in the facts in OP (I don't understand the facts in the second paragraph of the OP so won't be addressing anything related to that paragraph) but your client could have an operational failure that would need to be corrected under IRS EPCRS (need to determine if the plan documents require the amounts to be contributed by a certain time period) and your client definitely has a failure to timely deposit the contributions that would need to be corrected under DOL VFCP. Under EPCRS, normally corrections are limited to contributions that could be made without exceeding an IRS. Thus, under that reading, if an operational failure occurred, the correction appears to be limited to $4,000. However, for VFCO failures, I don't recall any language in the VFCP that would limit the contribution. In fact, the DOL's general view is once the amounts are withheld from the participant's pay, the withheld amounts are plan assets. So, conservatively speaking, it appears the correction under VFCP would include the full $5,000. If you have both an operational failure and an failure to timely deposit, a conservative approach would correct by contributing the full $5,000 as there is also a method by which to correct the excess deferral (and if done prior to April 15, there should be no downside to correct the excess deferral). Also, normally, under the corrections principles for both, employers do not adjust the Forms W-2 for the corrections. So the employee's W-2 would not be adjusted. A 1099-R would be issued for the return of the excess deferral in the following year by April 15 with the amount of the excess deferral and earning contained in Box 2 and using a Code P. Again, I don't fully understand what happened with the $1,000 but if not put in plan and paid to employee, normally that would go on the Form W-2 so a W-2C might be needed (employees typically do not receive a 1099 and it wasnt from plan so no 1099R)' Flying by the seat of my pants here so absolutely not advising you... just spitballing

I can't tell you how many times I've had people (including some investment reps who peddle the things!) say "It's not a 401k plan, it's a solo-K". And then there's the people who refer to PS or 401k plans as pension plans.

Yes,. if you have determined they are still a controlled group after the Family Attribution Rule changes of SECURE 2.0 they can have one plan. If not, as CUSEFAN suggested, they could have a MEP.

CAFA, is your question about health coverage that is insured or "self-insured" (that is, not provided by a health insurance contract)? Also, what method (if any) beyond a participant's statement would the employer/administrator use to discern whether a participant's spouse has an availability of coverage (other than Medicare) elsewhere?

To help the seller evaluate possibilities and probabilities of outcomes about a demand, an arbitration, or a court proceeding seeking a return of what the seller might assert was a mistaken contribution, the seller might want its lawyer’s evaluation. An important issue could be whether the seller’s ostensible belief or mistaken assumption was a mistake of fact. What fact was not known to the seller and would not have become known had the seller used reasonable diligence? Including (at least) reading all documents of the organization and of the transactions? If the seller might ground a claim on the receiving plan’s § 15.02(b), might such a claim be inchoate until the seller has filed an income tax return that claims a deduction for the contribution and the IRS has somehow “disallowed” the deduction? Or, might the receiving plan’s fiduciary be persuaded by a reasoning that the seller’s knowing that it must not file a tax return that would claim a deduction the taxpayer knows it is not entitled to is tantamount to the IRS’s disallowance. If, when the contribution was made, the seller was the or an employer regarding the participants (and their beneficiaries) who are the subject of the contribution, how confident are you that the contribution is not deductible? What consequences result from relevant acts having transpired in 2023? Although $250,000 might matter to the seller, might professionals’ fees and other expenses outweigh the probability-discounted recovery? This is not advice to anyone.

Those rules are very particular, and "I thought I could deduct but my accountant told me no" (or some other facsimile) I don't think qualifies as a mistake of fact. CB contributions - minimum required and maximum deductible - should have been calculated by a knowledgeable actuary. Following bad advice, ignoring good advice, or not getting advice is not a mistake of fact. Mistake of fact is like having the actuarial calculations based on materially incorrect data such that the contribution range is materially incorrect. Maybe that is the case here, but you don't provide details. If so, and a refund was requested from the trustee within a year of the contribution then there could be actionable cause, in which case I'd recommend lawyering up and following through on the litigation threat as it seems the seller has been ghosted. Note the amount available for return is limited to the excess over what could have been contributed had the mistake leading to the error not occurred. Disallowance of deduction is specific to IRS action and you don't mention that as a relevant event here.

Recognizing the practical limits of language, there can be differences between a businessperson’s consumer-facing or intermediary-facing sales label and terms or expressions a practitioner might use. And even law-defined or technical terms can have aspects of imprecision, misdescription, or confusion. I remember wincing when lawyers used “profit-sharing” to describe a nonelective contribution of a charitable organization that by law cannot have a profit to share with anyone. Even if that usage might have followed relevant tax law, I wouldn’t use it with my client’s customers because it would only confuse them. Perhaps especially if the employer provided a contribution for a period in which the organization had negative income. Or imagine a retirement plan in which no employee is a participant and hundreds of partners are participants. According to the executive agencies’ Form 5500 instructions, that is a one-participant plan. For the arrangement many people call a “self-directed brokerage account”, why do we say self-directed? When a plan that provides participant-directed investment limits a directing participant’s, beneficiary’s, or alternate payee’s investment alternatives to designated investment alternatives is that not self-directed by the individual? And if what we mean is an antonym or other-than of a plan’s designated investment alternatives, should we call it a Nondesignated Investment Alternatives Account? BenefitsLink neighbors could go on with many illustrations about how difficult it is to invent a short phrase that perfectly describes what fits a concept, rule, or arrangement.