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Last time, years ago, when I explained my aversion to naming the “employer” as plan administrator, I got pushback with the perfectly reasonable explanation that with respect to “small” employers my concerns were not well founded and my recommendations were impractical. A fair point. For sole proprietors, and some other businesses with a limited number of active owners, naming the employer as plan administrator is probably not worth much worry. I hope that those active owners understand that they are fiduciaries, and what that means, including potential personal liability. With respect to more complex businesses, the concerns are based on a corporate and agency law. To avoid need for a legal treatise, the practical question to address when the employer is the plan administrator is, “Who is the fiduciary?” Or, asked another way, “Who will be the warm body sitting behind the defendant’s table in a fiduciary lawsuit?” That person has an interest in 1) knowing that they are a fiduciary because without that knowledge, it is impossible to act in accordance with fiduciary standards (attention is the first requirement of a prudent person), and 2) being covered by appropriate insurance (e.g. E&O, D&O, special ERISA policies). To illustrate, if I were a plaintiff’s lawyer or the Department of Labor pursuing a claim of fiduciary breach, and a corporation were the “employer” named as plan administrator (without further specific identification or express delegation), I would name every individual board member and executive officer personally as defendants. And let us not forget the poor HR administrator, who is always on the front line of dealing with benefits and may be a fiduciary by default because they are forced by practicalities to engage in fiduciary activity without the pleasure of being named as a fiduciary. Maybe most of those people could get themselves dismissed, but it would not be fun or happy. This is how the “small employer” exception makes sense. A single owner who also handles all executive functions is on the hook as “employer” no matter what because there is no one else to bother. That is the crux of it. How best to identify the plan administrator, and to align fiduciary responsibility, depends on the organization, its personnel, and its circumstances. There is not an arrangement that fits all, and the appropriate arrangement is often not given any thought when a plan is adopted or restated. I suspect you were asking for some specific models. I am playing the lawyers card of “it depends”.* The organization could name the “employer” as plan administrator, but then a lot of other actions and documentation would be required to achieve the proper identification and alignment. For the most part, that ain’t gonna happen. Even if it does, the Department of Labor can be so ham-fisted that it won’t understand or respect the niceties, and it likes as many people as possible to sweat personal liability. *For a corporation, how about designating the CEO as plan administrator, with authority to delegate, including the authority to designate other named fiduciaries. Depending on circumstances, the CEO will delegate authority rather than directly undertake the functions. The CEO’s corporate responsibility for oversight of company business, and fiduciary responsibility for oversight of persons the CEO names as fiduciary, overlap nicely. For a large organization, corporate or partnership (e.g. professional services), I like fiduciary committees, which can be designated as plan administrator, and populated by a CEO or equivalent. The CEO is still a fiduciary for this purpose.

Hello @Brian Gilmore, thanks for sharing these details. We’ve found ourselves in a very similar situation and would appreciate your guidance. During last year’s open enrollment for the current year (2025), I enrolled in a PPO plan with my employer and elected an FSA with a contribution of $1,100. I was the only one covered under that plan. At the same time, my wife enrolled in an HDHP through her employer, covered herself and our daughter, and opened an HSA. We didn’t realize then that an FSA and HSA can’t coexist between spouses. I was laid off in mid-January. My employer had already opened the FSA and deposited the full $1,100, even though only $43 was deducted from my paycheck. I didn’t learn about the account until recently when I contacted the custodian to close an old HSA. After I lost my job in January 2025, I moved to my wife’s HDHP, and she increased her HSA contributions with the goal of reaching the family limit of $8,550. After reading your thread, she has now asked her HR team to stop contributions for December. With that context, I’m hoping you can help confirm a few points: Since I lost my job in mid-January but had an active FSA at that time, were my wife’s HSA contributions still allowed for the rest of the year? If partial-year eligibility applies, is the maximum HSA contribution prorated to 11 months, meaning 11/12 of $8,550 ($7,837.50)? I haven’t used any of the $1,100 in the FSA. The FSA provider shows the account as active and says I can still use the funds. Is that correct? Thanks again for your insights, Brian. Your expertise is genuinely helpful.

I'd love the thinking of folks who are more well-versed in SIMPLEs. Company A maintains a SIMPLE IRA in 2024 & 2025; several employees of Company A create their own Company B in 2025. Company A maintained a SIMPLE IRA (I'm not sure if the SIMPLE IRA is still active); Company B established a 06/01/25 effective date SH 401(k) Plan (short Plan Year). Company A & B have different EINS with no ownership crossover. I understand that when an employer establishes a mid-year 401(k) Plan that the deferral limit is adjusted based on the # of days/365 of each arrangement. Because these are two unrelated employers, my thinking is that this does not apply to this scenario, so all EEs can contribute the total $23.5k between the two arrangements if they would like (a maximum of $16.5k being attributable to the SIMPLE IRA). Do you agree that the deferral limit for the Company B 401(k) Plan does not need to be pro-rated based on the number of days it was in existence vs. the SIMPLE IRA? Since catch-up contributions are separate to each Plan, can a 50+ participant who contributed $10k to the SIMPLE IRA under Company A defer an additional $24.5k to the Company B 401(k) Plan? ($6.5k SIMPLE deferrals, $3.5k SIMPLE catch-up, $17k 401(k) deferrals, $7.5k 401(k) catch-up) If the Company B employees are still employees of Company A and participating in the Company A SIMPLE IRA, does that matter? Or is it just a consideration in that both the non-catch up deferrals to each arrangement count towards their overall 402(g) limit? As I write this out, I imagine that a relevant consideration is whether Company B and Company A constitute an ASG. If they do, would their contributions be subject to the adjusted deferral limits based on the days/365 of each arrangement?

Hello, A former employer offered an ESOP payout in lump sum. They will be diversifying the assets for anyone who does not take the lump sum, and the investment will be into a money market account. To reframe this more concisely, my shares will be purchased back by the company prior to 12/31/2025. I know the company is likely experienced more thanv a 3X increase in share value due to their rapid growth in the past year. The most recent valuation was at 12/31/2024. Will they need to perform an interim valuation, or will my shares be valued at the 12/31/2024 value, which is almost certainly 1/3 or less of the current value of shares? Anything I should do? Wondering if there are attorneys who specialize in this area whom I should consult with, or if this is a lost cause. Thank you!

I wanted to chime in with my personal experience. I am hitting age 65, and the SSA sent me two of these forms - both related to a company I worked for and left in 1998. One shows the name of the company, and a report from 1999 that I would have a pension of $150 a month. The other shows a successor company's name, at the same administrator address as on the first form, as a 401k plan and a balance reported in 2000 of $9,700. I checked my records, and found that I had rolled over about $4,000 from that company's pension fund in 2000, and rolled over $10,000 from my 401k account at the company to my rollover IRA account in 2004. Thus, in fact, it appears I have nothing left of a pension or 401k at that company or its successor. From the discussion above, this is due to there being no requirement at that time for SSA to be updated that withdrawals occurred. Interestingly, I have been receiving a (small) pension from a company I left in 1988, and the SSA did not send a notice for that company.

Requiring that a claim be signed in the presence of a notary or under a medallion signature guarantee program might help guard against a forgery. But a plan’s administrator might prefer to follow its procedures, including its claims procedure and other plan-administration procedures. A procedure might call for a witness to a signature if the claim would result in a payment more than $100,000 or some other specified amount. If not a standard like that, could an administrator defend its requirement as no more burden than is imposed on a similarly situated claimant? Or, if the “similarly situated” is that the administrator requires a witness whenever the administrator suspects a more-than-normal probability of a false claim, what factors does the administrator use to discern that probability? Is that discretion so wide that the administrator lacks an impartial procedure? Might too much burden on presenting a claim mean that the administrator lacks a fair procedure? This is not advice to anyone.

If fraud is what’s likely being attempted, requiring a Medallion Guarantee stamp could be much better, since the stamp provider is supposed to accept financial liability for asset transfers/distributions.

The Treasury’s rule to implement § 414(v)(7)’s requirement that a higher-wage participant’s age-based catch-up deferrals must be Roth contributions includes this: “Permitted correction on Form W–2. A plan may correct a section 414(v)(7) failure by transferring the catch-up contribution (adjusted for earnings and losses in accordance with § 1.402(g)–1(e)(5)) from the participant’s pre-tax account to the participant’s designated Roth account and reporting the contribution (not adjusted for earnings and losses) as an elective deferral that is a designated Roth contribution on the participant’s Form W–2 for the year in which the elective deferral was originally excluded from the participant’s gross income. However, this correction method may be used only if the participant’s Form W–2 for that year has not been filed or furnished to the participant.” 26 C.F.R. § 1.414 (v)–2(c)(2)(ii) (final and effective, but not yet compiled). I’m wondering whether a plan’s administration may do the converse: for deferrals that need not have been processed as Roth contributions, transfer that amount (adjusted for investment gain or loss) to the participant’s non-Roth subaccount and wage-report deferral amounts accordingly (if all steps are complete before W-2s run). The Treasury’s rule doesn’t explicitly say so. Yet, it seems logical and within proper plan accounting. But I hope BenefitsLink neighbors would spot weaknesses in my logic. Here’s my hypo: A plan has only elective deferrals, no nonelective or matching contribution. The plan excludes key employees and highly-compensated employees. The plan provides no limit on elective deferrals beyond what’s needed for the plan to tax-qualify. Suppose a 62-year-old § 414(v)(7)-affected participant has specified non-Roth for all her deferrals (and, despite the employer/administrator’s efforts, has not communicated anything about her preference regarding 2026’s Roth catch-up constraint). Her instruction for deferrals—specified by dollar amount, not a percentage of any measure of compensation—is $1,375 each pay. Her deferrals for the year’s first 17 (of 26) pays are within the without-catch-up limit. The 18th pay would have most of its deferral allocated to the normal limit, but some to catch-up. And pays 19-26 would be wholly allocated to catch-up. Imagine the employer, fearing a § 414(v)(7) failure, mistakenly stops this participant’s non-Roth deferrals sooner than is necessary and, applying what the administrator assumes is a deemed election, treats as Roth contributions some of what could properly be non-Roth deferrals. The participant, still inattentive, ignores the employer/administrator’s communications. On Friday, January 1, 2027, the participant (following her New Year’s Day custom) checks, online, her plan account, and sees the unrequested amounts in Roth subaccounts. On Saturday, she asks her friend, an associate in a law firm’s employee-benefits practice, about this. After hearing him explain the essence of § 414(v)(7), she explains she prefers non-Roth, and wants to tolerate Roth only for a deferral that can’t be made as non-Roth. He suggests, cautiously, that she ask her employer whether it will adjust amounts between the Roth and non-Roth subaccounts. On Monday, the participant calls her employer. The payroll and human-resources managers both are willing to do adjustments and complete them before W-2s are run, but only if the retirement plan’s third-party administrator says it would be proper. BenefitsLink neighbors, would you suggest allowing such a Roth to non-Roth transfer? What issues am I missing?

That’s correct.

very similar to this error and correction - same correction and analysis principles under EPCRS https://www.irs.gov/retirement-plans/simple-ira-plan-fix-it-guide-you-excluded-an-eligible-employee-from-participating

https://www.irs.gov/retirement-plans/simple-ira-plan-fix-it-guide-you-used-the-wrong-compensation-definition-to-calculate-deferrals-and-contribution-to-participants-simple-iras

We have discovered that, due to a payroll setup issue, employee deferrals to our SIMPLE IRA plan were calculated on an after-tax basis instead of a pre-tax basis from January to July 2025. Can we fix this by adjusting the remaining payrolls in 2025 to ensure each participant's total annual deferral matches their elected percentage of compensation for the remainder of the year? What would be the appropriate correction method?

For the vesting - anything accrued prior to the change to the 3 year cliff would have to be on the 6 year graded or better. The amended could be written such that only new accruals are subject to the three year cliff. One simpler method is to amend so all old accruals are on a modified 3 year that is the combined better of the two (perhaps 0%, 20%, 100%) , and then new accruals are on a regular 3 year cliff. Another is to just use a modified 3 year schedule for old and new for everyone for all purposes. Lots of different ways to slice and dice, just make sure there is no cut-back.

For non-FMLA leave situations where health FSA coverage continues, you would generally use the standard pre-pay, pay-as-you-go, or catch-up contribution options set forth in the cafeteria plan FMLA rules. I understand you're talking about a non-FMLA leave, but that's really all we have to go with. More details: https://www.newfront.com/blog/health-fsa-for-employees-on-leave How to Collect Health FSA Contributions for the Leave Period The Section 125 rules provide three ways for employers to collect the employee’s health FSA (or any other group health plan) contributions during the leave: 1. Pre-Pay: Under the pre-pay option, the employee is given the opportunity to pay for the continued coverage in advance (i.e., before commencing the leave). Employees can elect to reduce their final pre-leave paycheck(s) with pre-tax salary reduction contributions for all or a part of the expected leave period. Pre-Pay Limitations: The pre-pay option cannot be the sole option offered. Employers offering this approach must offer at least one of the other two options to employees. Pre-pay cannot be used to pay for coverage in a subsequent plan year on a pre-tax basis. If the leave is expected to spill over into a subsequent plan year, the employee can only make pre-tax contributions for the part of the leave that occurs during the initial plan year. 2. Pay-As-You-Go: Under this approach, employees pay their contribution in installments during the leave. If it is a paid leave, the employee can continue to use the Section 125 cafeteria plan to contribute on a pre-tax basis from the stream of compensation through payroll. Otherwise, these contributions would have to be made by the employee on an after-tax basis (e.g., by check). 3. Catch-Up: With the catch-up approach, employees agree in advance to pay their contributions upon returning from leave. These catch-up contributions will reduce their initial return paycheck(s) by the contribution amount missed during the leave period. Although not entirely clear, it appears that employees may make catch-up contributions on a pre-tax basis even if the leave straddles two plan years. In general, employees on a paid leave will prefer the pay-as-you-go option because it facilitates pre-tax contributions in a consistent manner without any disruption. Employees on unpaid leave will generally prefer the pre-pay or catch-up options to avoid having to make contributions on an after-tax basis outside of payroll. Although the cafeteria plan regulations explicitly address these three payment options only in the context of FMLA leaves, employers are generally comfortable following the same approach for any other form of leave (e.g., state protected leave) where the employee will continue health FSA or other group health plan coverage. Slide summary: 2025 Newfront Health Benefits While on Leave Guide

There are different options you could take for how to handle. There's no right answer here--just what you find to be the most appropriate for your situation. The employee already authorized the deductions via the Sections 125 cafeteria plan election, so that's not an issue. The options are: Spread Repayment Over Multiple Pay Periods: Take the missed contribution amount in intervals over the remainder of the year. Lump Sum Repayment: Take the missed contribution amount in a lump sum. Convert Missed Amounts to Employer Contributions: Forgive the employee contributions and not require the employees to repay. I posted a full walkthrough on all these options (including template employee communications) here-- https://www.newfront.com/blog/correcting-missed-cafeteria-plan-contributions Slide summary: Newfront Office Hours Webinar: Section 125 Cafeteria Plans

Happy Thanksgiving to all my BenefitsLink cohorts! We’re closed for the week (but I did help a few clients with some amendments—don’t tell on me), so this is a week to recharge. Hope everyone enjoys family, food, and football!

Cuse is correct. If your client needs proof, you can point them to IRC sec. 401(k)(12) which requires that the contribution be made to "each employee who is not a highly compensated employee and who is eligible to participate in the arrangement." Also see Example 4 in 1.401(k)-3(c)(7) of the regulations which is exactly on point that you can not impose a last day requirement on a safe harbor contribution.

Thanks Paul I and RatherBeGolfing. As it is, we like our current IT provider because of the strength of the data security. Yes there is no question paying extra for that is worth it, and really is there even a question about it? I don't think geographic location matters for this anymore. I was indeed hoping to find a provider that assists in the TPA industry. I first reached out to NIPA, our cybersecurity insurance agent, our cybersecurity insurance provider, and none of them could point me in a good direction.

Happy Thanksgiving everyone! I hope you all get to enjoy time with family, a good meal, and of course, some football! I'm not working tomorrow, but we have a lot of people out on Friday so that is my day to catch up on stuff without too much interruption.

During a review of payroll deductions and benefits records, I discovered that one of our employees had a missed HCFSA deduction earlier this the year (system/timing issue from when the employee started his employment). If no corrective action is taken, the employee will be about $120 short of his elected annual goal. When I reached out to the employee to make him aware of the situation, he stated he does not want additional money to be taken out of an upcoming paycheck as a correction - he wants to leave things alone. What are my options? Are we required to take the additional $120 before the end of year to ensure that money deferred equals his annual election? If the employee objects, what regulation/statute/article am I pointing him to so that he understands that this is required? Related but separate, If someone misses FSA contributions because they are on unpaid medical leave (not FMLA, but state mandated leave) and underfunds an FSA for the annually elected amount, how should that be addressed? TIA

I hope you all have a great Thanksgiving, unsullied by productive thought. (We are having our meal on Saturday, as many family members can't make it tomorrow, so I'll be working tomorrow - great time to catch up on stuff with no phone/e-mails!)

In addition to what @Paul I said, I don't think the provider has to be local unless you actually require local services. Data security should be at the top of the list for your provider requirements. Its a plus if they have other TPA clients and understand industry needs. For example, what type of support they provide outside of standard hours, and how could this impact you during busy season / filing deadlines.

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I'm frequently surprised at the litany of reasons why some people may not want to be found (or accept payment). Divorce, separation, child support, legal or illegal debt, avoiding a stalker, it goes on and on... we had one where the former employee was collecting disability, and getting a payment from the plan would have reduced or eliminated her disability payment. It'll probably get worse now with the ICE crackdowns.

Stating something obvious.... Is this Highly Paid Individuals determination for 2026 plan centric at $150,000 (indexed) in 2025? In other words is does not matter on other outside interests and it does not matter what a new hire made with a previous employer.