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

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

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

Be very careful in reading the plan document, particularly where there is an Adoption Agreement and a Basic Plan Document. Typically, the capitalized terms in the Adoption Agreement is a clue that there is a formal definition elsewhere in the AA or BPD that provides a more detailed description of what is or isn't considered where the term is used. Where the plan documentation allows for alternative definitions of a term like "Plan Compensation", it effectively is creating multiple, separate terms like "Plan Compensation for Deferrals", "Plan Compensation for Match", "Plan Compensation for NEC". After wading though the plan terms in fine detail, the step through the calculations. In the OP, it may be the case that 50% match rate is applied to the actual dollar amount of the deferrals, but the 10% maximum may be based on the deferral rate or may be based on the Plan Compensation for Match. If ultimately the plan is silent or ambiguous, then the Plan Administrator will need to provide guidance and document that guidance for posterity.

4/1/27 is the latest date to take his 2026 RMD. He still needs to take a 2026 RMD.

Terminology comes and goes. Two things are are most important. One is that the terminology is used broadly enough that there is a shared understanding of what is meant by it. The other is that the terminology does not conflict with its shared understanding within government agencies that oversee the industry. How many people today would understand what was meant by a Keogh plan or an H.R. 10 plan? How many know that today's hot Roth trend is named after William Roth, the Senator from Delaware that came up the Roth IRA in 1989 that in 2001 morphed into the Roth 401(k)? How many know that the concept of 401k deferrals was used in plans in the 1950s, frowned upon by the IRS, but then validated when section 401(k) was added in 1978? Interestingly, in the late 1970s people started out calling the 401(k) plan as salary reduction plans, and that terminology was not well received by employees. Today, solo-k generically is recognized as a one-person plan as does the IRS https://www.irs.gov/retirement-plans/one-participant-401k-plans. Some pre-approved plan document providers have products that basically are pared down adoption agreements of their 401(k) documents. These products use the term "owners only plan". Given the many ways that one-person plans get into regulatory trouble, maybe we should refer to owners only plans as "OOPs"!

Plans limiting pre-tax catch-up contributions for employees not subject to section 414(v)(7). The rules of paragraph (b)(3)(i) of this section also apply to a plan that includes a qualified Roth contribution program and, in accordance with an optional plan term providing for aggregation of wages under § 1.414(v)-2(b)(4)(ii), (b)(4)(iii), or (b)(4)(iv)(A), does not permit pre-tax catch-up contributions for one or more employees who are not subject to section 414(v)(7). The bolded part makes all the difference here. Normally, you do not aggregate wages from multiple employers to deterimine if an employee is subject to mandatory Roth catch-up - even if the employers are part of a controlled group or otherwise aggregated for other plan purposes. However, the referenced sections provide for optional aggregation of wages if the companies are using common paymaster, are aggregated under 414(b), (c), (m) or (o), or in the year of an asset purchase. If the plan is optionally aggregating wages under one of those provisions, then you may end up with some employees who would not normally be subject to mandatory Roth catch-up, but who are solely because of the aggregation. What the quoted paragraph is saying is that a plan can restrict those employees to Roth catch-up even though strictly speaking they are not subject to 414(v)(7).

I believe your Plan Administrator gets the final call on the interpretation of plan terms. Especially if it's not totally spelled out in the document. Maybe check references in the allocations section of the BPD how they as document authors expect the match to be determined. (My guess-off-my-head is that you'd use match comp for calculating match contributions even if it's a higher ADR to the participant, so your method 2.)

Maybe I'm just being picky. If the vendor uses the term "solo-K", is it time to find another vendor?

I'd like to get the group's opinion on how the Actual Deferral Rate is calculated in a 401(k) Plan has a discretionary matching formula of 50% up to 10%, when different exclusions apply for match than for deferrals, defined below. We have a differing of opinions on how the match should be calculated. Method #1 calculates the ADR based on deferrals and plan comp for deferrals. Method #2 calculates the ADR on deferrals and plan comp for match. Method #2 produces a higher % which increases the match amount but doesn't exceed the maximum match available based on 5% of match comp. Method #1: Plan compensation for deferral: W-2 excluding fringe etc ($124,124.00) Plan compensation for match: W-2 excluding fringe etc, bonus, overtime, commission. ($82,726.58) Employee Deferral: $9.800. ADR 7.9% ($9,800.00/$124,124.00) Total match: $3,265.76. ACR 3.95% ($3,265.76/82,726.58) Maximum match available: $4,136.33 ($82,726.58 * 5%). Method #2: Plan compensation for deferral: W-2 excluding fringe etc ($124,124.00) Plan compensation for match: W-2 excluding fringe etc, bonus, overtime, commission. ($82,726.58) Employee Deferral: $9.800. ADR 11.85% ($9,800.00/$82,726.58) Total match: $4,136.33. ACR 5.0% ($3,265.76/82,726.58) Maximum match available: $4,136.33 ($82,726.58 * 5%). Questions: Which method is correct? Method #1 - bases the ADR on deferrals/deferral plan comp where Method #2 bases the ADR on deferrals/match plan comp. Is there any flexibility in how the ADR is calculated for allocation purposes when the plan document defines match comp differently? I understand the testing implications (ACP, 414(s), BRF) are separate issues here. Thank you in advance for your feedback.

Has to take it this year when the plan terminates.

By quoting (and hyperlinking to) a paragraph from a Treasury rule, I don’t suggest it as support for or against any interpretation. Rather, I suggest only that an interpreter (perhaps one like the webinar speaker WCC described) might consider it in forming one’s interpretation. That said, few interpreters are ready to pursue an interpretation contrary to Treasury’s explanation in the rules’ preamble.

I'm sure this has been asked. I have an owner who is terminating his small 4-employee Profit Sharing plan, and turns 73 in 2026. typically we would make sure that a participant takes their (generally already existing annual) RMD prior to rolling the remaining funds, however he technically has until 4/1/27 for the 1st RMD. Is it ok to let him defer and allow all monies to transfer to an IRA now? this is assuming he may want to defer, and I'd like to have an answer ready, partly for myself and any future scenarios. He may not care and want it this year. He has a significant balance so may not want two taxable required distributions in 2027. thanks in advance for any insight!

for Pattison Pension (Albuquerque NM / Hybrid)View the full text of this job opportunity

I believe it would be Code 7. Under the applicable regulations, excess designated Roth contributions are taxed twice if not timely corrected. Treas. Reg. § 1.402(g)-1(e)(8)(iv) provides, if not corrected by April 15 of the following year, the distribution from a Roth account of the excess Roth contribution and the attributable earnings are taxable no matter when they are later distributed, subject to the normal limitations on distribution of elective deferrals, despite the fact that the distribution is from a Roth account. Treas. Reg. § 1.402(g)-1(e)(8)(iv) regarding distributions after the correction period states: So it seems that while a normal distribution from a Roth 401(k) is not taxed at distribution at all, an over contribution is taxed in the year received.

@WCC, I agree, that doesn't seem right. The explanation is long, but this is what the final Regulation says in Section I under the Summary of Comments and Explanation of Revisions section, which seems to clearly indicate that a plan can not require all catch-up contributions to be Roth for everyone: "While proposed §1.401(k)-1(f)(5)(iii) would permit a deemed Roth election with respect to a participant who is subject to the Roth catch-up requirement, the proposed regulations did not include a rule permitting a plan to require that all participants’ catch-up contributions be designated Roth contributions. Footnote 16 of the preamble to the proposed regulations explained that, for a participant who is not subject to the Roth catch-up requirement, allowing a plan design that requires all participants’ catch-up contributions to be designated Roth contributions would be inconsistent with the language of section 402A(b)(1), which provides that a designated Roth contribution must be elected by an employee “in lieu of all or a portion of elective deferrals the employee is otherwise eligible to make.”8 Notwithstanding the explanation in footnote 16 of the preamble to the proposed regulations, commenters requested that the final regulations permit a plan to require that all participants’ catch-up contributions be made as designated Roth contributions, regardless of a participant’s FICA wages for the preceding calendar year. Commenters argued that permitting this plan design would simplify implementation of the Roth catch-up requirement, would reduce section 414(v)(7) failures, and, in some cases, could avoid a perception of unfairness (for example, in the case of a participant who is not subject to the Roth catch-up requirement under section 414(v)(7)(A) because the participant did not have FICA wages in the prior year, but had wages from self-employment for the preceding calendar year that exceeded the Roth catch-up wage threshold). With respect to section 402A(b)(1), commenters argued that provision merely defines the term “qualified Roth contribution program,” does not explicitly prohibit a plan from requiring that all catch-up contributions be made as designated Roth contributions, and permits an employee to have designated Roth contributions “made on the employee's behalf” under the plan. The Treasury Department and the IRS do not agree with the commenters’ characterization of the language in section 402A(b)(1) as merely a definition. In addition, the language of section 402A(b)(1) permitting an employee to have designated Roth contributions “made on the employee’s behalf” under a plan was added to section 402A(b)(1) by section 604(b) of the SECURE 2.0 Act. Section 604 of the SECURE 2.0 Act permits certain nonelective contributions and matching contributions that are made after December 29, 2022, to be designated Roth contributions. Thus, this language reflects the distinction between designated Roth contributions that are made in lieu of pre-tax elective deferrals and those that are made in lieu of nonelective or matching contributions. Further, section 414(v)(7)(A) refers to designated Roth contributions as defined under section 402A(c)(1), and, under section 402A(c)(1), the term “designated Roth contribution” includes “any elective deferral…which is excludable from gross income of an employee without regard to [section 402A], and the employee designates (at such time and in such manner as the Secretary may prescribe) as not being so excludable.” Thus, under section 402A(c)(1), an employee must be permitted to make a pre-tax elective deferral in order for the employee to designate such a pre-tax elective deferral as a designated Roth contribution. Although the requirement under section 402A(b)(1) and (c)(1) that an employee be eligible to make pre-tax elective deferrals in order to elect to make designated Roth contributions in lieu of all or a portion of those pre-tax elective deferrals is not consistent with the Roth catch-up requirement under section 414(v)(7)(A) in the case of a participant who is subject to the Roth catch-up requirement, final regulation §1.414(v)-2(b)(6) resolves this inconsistency by providing that the Roth catch-up requirement applies notwithstanding section 402A(b)(1) and (c)(1). However, there is no inconsistency in the case of a participant who is not subject to the Roth catch-up requirement. Accordingly, the final regulations do not include a rule permitting a plan to require that all participants’ catch-up contributions be designated Roth contributions. 8 Section 402A(b)(1) provides that “[t]he term ‘qualified Roth contribution program’ means a program under which an employee may elect to make, or to have made on the employee's behalf, designated Roth contributions in lieu of all or a portion of elective deferrals the employee is otherwise eligible to make, or of matching contributions or nonelective contributions"

The answer is yes. The issue is under the DOL rules. The no-later-than-30-days deadline really doesn't apply in the eyes of the DOL, the key phrase is "as soon as they can be reasonably segregated." You should review the rules under the DOL Voluntary Fiduciary Compliance Program (VFCP). The DOL VCFP website states: The latest iteration under the DOL rules can be accessed at Federal Register :: Voluntary Fiduciary Correction Program. For older versions see https://www.federalregister.gov/citation/67-FR-15062; https://www.federalregister.gov/citation/70-FR-17516; https://www.federalregister.gov/citation/71-FR-20262. The VFCP general website can be accessed at Voluntary Fiduciary Correction Program | U.S. Department of Labor. The correction might be fairly complex if as your post states this issue has been occurring for perhaps every payroll period in the last 6 years. Also, though there is a 7-day safe harbor, when correcting under VFCP, earnings are to be calculated from the date the deferrals were actually withheld from the affected employees' wages (not the end of the 7-day safe-harbor period).

Thank you. We are using our Adoption Agreement so there is no issue with the structure. We just wanted to confirm that one document for the Adopting entities would be fine and there is no need for 2 documents / 2 separate plans.

They are likely a control group so one plan with each LLC adopting should be fine. Even if not a CG they could do that as a multiple employer plan. However, if the desire is to use a vendor's solo-k product, need to make sure it accommodates whatever structure/LLC relationship you have.

Wife has an LLC with no employees. Husband has an LLC with no employees. Both own 100% of their own LLCs. The Wife's LLC pays the Husband's LLC. It is not clear if the Husband has any other source of income in his LLC. They both would like to set up a solo 401k plan. Do they need 2 separate plans or could both LLCs adopt the plan and only set up one plan?

for Wells Thomas, LLC (Branford CT / West Hartford CT)View the full text of this job opportunity

for FMI Retirement Services (Huntington NY)View the full text of this job opportunity

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

The employer and the plan’s administrator (whether these are the same person or distinct persons) might—after considering each’s lawyer’s, certified public accountant’s, or enrolled agent’s advice—consider whether to check the facts of what happened, including what deferral election the participant properly made, made invalidly, or made not at all. Might the “off-cycle” not have been compensation from which an actual and proper deferral could be made? Do the documents governing the plan grant the administrator authority to refuse a participant contribution because it would exceed a deferral limit? Does a salary-reduction agreement or other form state that the employer will or may interpret a deferral election as limited to the lesser of the amount specified or the largest amount that would not exceed an applicable deferral limit? Even if not expressly stated in any writing, might the plan administrator’s interpretation of that kind be a prudent interpretation of the documents governing the plan? To the extent a participant contribution was not sent to the plan’s trust and was not a proper deferral, might the employer make its Form W-2 wage report follow that truth? Is there time to find the law, plan provisions, and facts with time for the employer to do its wage report by next Monday? This is not advice to anyone.

The IRS on its website says you can file electronically or file on paper. All of the IRS rules about counting 10 forms to get to mandatory electronic filing apply to filing payroll forms (W2s, 1099s...) and to filing a Form 5500EZ. Here is another link https://accountably.com/irs-forms/f5558/ that does a good job talking about 5558s in plain English.