All Activity

“This is exactly the reverse of what Congress was trying to accomplish.” But how do we know that what Congress sought to accomplish is something different than what the enacted text provides? Among many challenges in interpreting recent years’ tax legislation is that there often is no committee report that describes the text Congress enacted.

I have had audits in the past, never this long. I am aware of the personnel changes at PBGC, especially with legal department, so nothing to do but wait. Thank you for your input.

For more than a few church employers, neglecting or miscounting a § 107 parsonage allowance is an error. Might the minister too have believed her specified deferral percentage would apply only to her pay other than the parsonage allowance? If so, might the parties reform their salary-reduction agreement or the participant’s elective-deferral instruction to provide what the minister would have requested had both the employer and the minister known that the plan’s definition of compensation includes a parsonage allowance? Had the minister known, she might have elected a lower percentage of the higher compensation. If so, might both parties ratify what happened as a reasonable approximation of what such a reformed agreement provided? Consider that the minister’s acceptance of pay, and of wage reports, with no objection might support a ratification. This is not advice to anyone.

@Peter Gulia The plan's definition of compensation for the purpose of calculating contributions based on a percentage includes housing allowance. Because the employer did not include the pastor's housing allowance as part of his comp, the calculation resulted in a much lower contribution.

Similar to most government agencies, PBGC has had staffing cuts. If the plan has not received a letter saying the audit is closed, then it is still ongoing. PBGC auditors communicate via email, so you can always email the auditor and ask for a status update. I have seen audits take up to 2 years to complete.

Plan granted SARs with exercise price below FMV. Grant was in 2020, vested in 2021, 2022, and 2023. No rights have been exercised. Notice 2008-113 provides for correction only if correction is made in year of grant or by end of year following year of grant. If no rights have been exercised, is it possible to still use 2008-113? Also, now that we're in 409A land, what if the SAR grant satisfies all the requirements of 409A, meaning (1) specifies number of SARs granted (2) specifies exercise period (5 years from vesting date) (3) specifies exercise price. Or, is this not sufficient since there is no specific exercise date, only an exercise period - 5 years from vesting. Do we still have income at vesting? Or is this ok if otherwise satisfies section 409A requirements?

You’re likely right that, for a church plan with 700 participating employers, it seems unlikely the convening plan sponsor (or the plan trustees or the plan administrator, if either has a power or other authority) would amend the plan because one or a few of the 700 misapplied an otherwise satisfactory definition of compensation. About what correction to pursue, other BenefitsLink neighbors know much more than I know about how to point you to a fitting or defensible correction. Just curious, which element of compensation did a participating employer neglect to count in its measure of compensation on which to apply a deferral percentage?

Background: 403(b)(9) non-electing church plan Multiple employer plan The plan (not the 700 individual participating employers) sets the definition of compensation when it comes to calculating contributions based on a percentage. This one employer used the wrong definition of comp and consequently shorted deferral contributions for the employee since 2021 (yikes) I am unsure what correction method is appropriate and didn't find anything specific in Rev. Proc. 2021-30. I also read a page on the IRS website that states the plan can amend the definition of compensation, but that does not seem reasonable with a multiple employer plan where there is one definition for all employers to follow. How does the employer fix this? Can the employer provide an employer contribution for 50% of missed deferral portion? Is there something clear cut I am missing? TIA for your responses.

for NPPG (Remote / Shrewsbury NJ)View the full text of this job opportunity

I was reading through the IRS Cost-Of-living changes and thought the exact same thing!

If a company is in the business of offering early childhood education (infant to pre-K), kindergarten, before and after school programs, and summer programs do you think that constitutes a service organization? I've reviewed the Who's the Employer's ASG chapter and conducted supplementary research, but I can't find anything on-point. I know educational services do not count as consulting, so that avenue is closed. I lean towards concluding that the school is a service organization because the material income producing part of their business is the teachers' services, rather than capital. But I could be persuaded the other way too.

for Ascensus (Remote / NC / TN)View the full text of this job opportunity

And Groom Law Group's article today cites BenefitsLink.

Yeah I think it's weird they highlight that distinction since you can only contribute for under 18 folks anyway. How many under 18 employees wanted to contribute to their own Trump account? Pretty much a non-issue. The BIG deal I think from this is that it seems to suggest employees will be able to make pre-tax salary reduction contribution elections (presumably up to $2,500, reduced by any employer contribution) for Trump accounts of a dependent. There's no way to make deductible contributions outside of payroll. So all of a sudden the name of the game in Trump accounts is going to be to get your employer to throw them into the cafeteria plan, and then always make sure to utilize the pre-tax option through payroll before ever considering a regular nondeductible contribution. Given that most employers are working with a FSA TPA that offers a variety of cafeteria plan benefits in a unified login (health FSA, dependent care FSA, commuter, HSA), it seems that adding Trump accounts with employee pre-tax contributions would be an easy flip to switch to offer a pretty meaningful benefit to employees at almost no cost.

@Connor https://www.federalregister.gov/documents/2025/09/16/2025-17865/catch-up-contributions

For the ASG question - IF they are one - there is a whole other issue of not having a SIMPLE at the same time as a 401(k) plan, by the same employer. And an ASG is treated as a single employer for those purposes, so generally cannot have both in the same year. Determining the status of the SIMPLE would be very important. The deferral limits for short initial year 401(k) plans generally aren't pro-rated as they are personal limits, not plan limits, but the plan document should address if there is any pro-ration of limits (deferral or otherwise) for an initial short plan year where there is no prior SIMPLE or predecessor plan. If there is a basic plan document for the 401(k) plan, you should read it carefully.

We use FT Williams. We tried to help a client file a 5330 to pay the excise tax for an over contribution. FT Williams tells us the filing rejected because the form was late and money was due. They however don't give us any insight how to get the payment and filing done in the correct order. If anyone has done this successfully we could use some insights on how to do this. This was so much easier with the old paper forms.

Let's face it. A client complaining about giving the SHNEC to terminated employees more often than not is motivated by two things. The first is greed. The client likes the idea that they can maximize elective deferrals and think nondiscrimination tests are unfair to HCEs (and they abhor refunds). The second is the perception that terminated employees were not committed/loyal to the company and should not be "rewarded" with a 3% contribution (even though the SHNEC is very much akin to the employer funding payroll taxes). Sometimes the message has to be if the client wants the privilege of avoiding nondiscrimination testing (i.e., being able to maximize deferrals), the cost of that privilege is the 3% SHNEC. That being said, when a significant number employees do not defer, changing the plan design to a Safe Harbor Match often reduces the overall employer cost which seems to somewhat placate the client (until the employees catch on and start deferring more). Kudos to @Tom for trying to be responsive to his client and taking a wild shot.

Sadly, telling a potential plan sponsor about how the safe harbor works during a sales meeting has no bearing on what they remember over a year later when you provide the contribution amounts.

Thanks. I read yesterday’s prepublication release of a not-yet-published IRS Notice describing interpretations and implementations the Treasury might intend to propose. Among many points, I saw that Q&A about cafeteria plans. The response treats an employer’s § 128 contribution (even if made by the employee’s wage reduction) as something “not includible in the gross income of the employee by reason of an express provision of this chapter.” That’s the § 125(f)(1) definition of a qualified benefit. Yet, the IRS’s description of an interpretation the Treasury might intend to propose hints at a distinction between (1) a Trump account under which the § 128-contributing employer’s employee is the account’s beneficiary and (2) a Trump account under which the employee’s “dependent” is the account’s beneficiary. Whether situation 2 always or ever is an absence of deferred compensation § 125(d)(2)(A) precludes seems doubtful. But those questions might not matter if a Treasury or IRS interpretation favors taxpayers. In the early 1980s’ development of cafeteria plans, an important part of the reasoning was seeking to reduce perceptions that some employees get more compensation than similarly situated other employees because of differences in which benefits a worker needs, wants, or even can use. This is not advice to anyone.

for Anchor 3(16) Fiduciary Solutions, LLC (Remote / Wexford PA)View the full text of this job opportunity

@Peter Gulia a surprising development here, I stand corrected: https://www.irs.gov/pub/irs-drop/n-25-68.pdf Q. I-3: May a Trump account contribution program be offered via salary reduction under a section 125 cafeteria plan? A. I-3: Yes, in most, but not all, circumstances. A Trump account contribution program may be offered via salary reduction under a section 125 cafeteria plan if the contribution is made to the Trump account of the employee’s dependent but not if the contribution is made to the Trump account of the employee. Although a Trump account contribution program would be a qualified benefit under section 125(f)(1), a contribution under the Trump account contribution program to a Trump account of the employee would provide deferred compensation under section 125(d)(2)(A), because the employee would have a vested right to compensation that may be payable to that individual in a later year. The Treasury Department and the IRS intend to address rules related to the coordination of Trump account contribution programs and section 125 cafeteria plans in proposed regulations.

Thank you for your responses. I suppose I should've been a little more specific - the letters are going to the plan sponsors, not the participants, and their only call to action to us was the generic 'please call with any questions'. Most of the plans have participants numbering in the dozens, so no large plans, but some do have both W-2 participants and those who receive SE income - some even have participants who get both types of income. Though we are the bookkeepers, clients have occasionally asked for our take on the new rules and their options. We explained that, like many regulations, there are many ins and outs, and we only know the most general basics. We also remind them to talk to those who specialize in such matters. Artie M I think what you're saying is the missing part for us, as the articles and newsletters we've read (and there were quite a few) didn't delve as deep into the issue. Are the regs that you are citing found in the final SECURE 2.0 regs that recently came out? I'm with you Austin3515 about just adding Roth, as long as the payroll services don't make us regret it.

You’re reading it correctly. Under the updated rules, a plan can file the 5500-SF if it has fewer than 100 participants with account balances on the first day of the plan year. The only other things I’d check are whether the plan falls into a category that still requires the full 5500... For example, being part of a pooled employer arrangement or holding employer securities.

Based on your description, I am not seeing the discrimination issue: "participants whose FICA wages were $150k or less in the prior year can continue to make catch-up contributions on a pre-tax basis, but those whose wages exceed this limit are not permitted to make any catch-ups." So, here, the over $150K participants do not get catch-ups (because they have to be Roth). So they took away something from the more highly compensated.... Under the Code, there cannot be discrimination against NHCEs... no rule says you can't discriminate against HCEs. The discrimination issue comes up if a Plan has participants who do not earn FICA wages and they are HCEs for nondiscrimination testing but not highly paid individuals for Roth catch-up purposes. In that situation HCEs who are not HPIs might be able get catch-ups but some NHCE who are HPIs could not get catchups. That is a very specific set of circumstances. This set of circumstances is addressed in the regs that provide a safe harbor if those HCEs who are not HPIs are not eligible for catch-ups either. If you don't use the safe harbor the Plan would need to do BRF testing (and may or may not fail it). Those same regs say you can design a plan permitting catch-ups but does not permit Roths. The communications piece you read may be meant for the general population and not for a plan with this specific set of facts. Maybe I am misunderstanding the query....