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The participants have the right if it's in the document. The document either needs to be amended to remove the option or the employer needs to find new service providers.

True, participants have a right to demand it - but let's be clear here - the right can *only* be enforced against the plan fiduciaries - not the service provider. Service providers can define their offering as they see fit - and it's up to the fiduciaries to determine if that is appropriate. When we take on a new client, we restate them onto our document - and ensure that it contains only those provisions that we can handle. BTW, I know it is only an example, but any service provider that can't handle voluntary after tax contributions won't be in business long....

To my knowledge yes, although these situations have me looking for a sharp nail to step on. I'd hoped that your title (both spouses) meant a polygamy question, lol!

Actually, the safe harbor TH exemption isn't lost even if non-Key HCEs miss out on a THM. (Thought so, but just double-checked the EOB to confirm.)

Still calendar-based, so one could do all 19,500 in the second half of 2021 and all 20,500 in the first half of 2022 to hit a total of 40,000 in non-catchup deferrals all within the same plan year.

It sounds like you have (or your client has) a 401(k) / 401(m) plan that is not a 401(k) / 401(m) safe harbor plan and does not have employer nonelective contributions made to it. You are performing the ADP / ACP tests with compensation that clearly satisfies 415 compensation. In those circumstances, there is no requirement that the compensation definition used by the plan to compute contributions must comply with Code Section 414(s).

So Jakyasar, you're talking here about a non-401(k) plan (no employee deferrals), and presumably the employer was on extension for its return, so they/you are using the ability under SECURE Act change to adopt a plan retroactively, right? I assume a noninstitutional trustee (e.g., the company owners), because most likely a bank or other institution would not have allowed opening the account in name of trust without document. I would say: (1) To some extent the issues posed are novel, since the SECURE Act change is new. (2) Once they signed the plan documents, you certainly have a trust and I think you'd potentially run into more trouble if the trustee tried to take the money out now, and then put it back in. (3) I guess the IRS could argue that the trustee owes taxes for the period from 5/23/2022 to 6/3/2022 (a little over a week), since the money was not in a qualified trust. But as long as the total allocations for 2021 don't exceed the 415 limit, don't see how you would have a qualification issue. (4) In the small corporation setting, when issues like this have been dealt with on audit or determination letter process, sometimes lawyers will argue successfully to the IRS that since the individual who made the deposit was a 100% shareholder, or if all the directors were aware of and had approved the deposit in some way, the plan had been adopted. In theory the success of this approach depends on what the plan documents say. If you're lucky, (a) the plan document won't say that it is not adopted until signed, but rather will just say it needs to be "adopted," and (b) the corporate resolution that was provided will authorize the officers to "sign such documents as are deemed appropriate to carry out the purposes of these resolutions, etc." (5) You could always put a memo in the file saying that you had talked to the employer and the appropriate body (board, sole proprietor/boss, partners) had considered the plan's adoption and decided to do it before the deposit was made, assuming those are the facts. Not saying that would be bullet-proof if this was $1 million and someone had it in for this employer (e.g., the business is about to go bankrupt and the employer is trying to put money our of a creditor's reach), but it could help, e.g. in an exam. The issue could certainly be spotted in an exam, because the IRS always checks dates of documents. But absent unusual circumstances this does not seem like the sort of thing an agent should be upset about, especially given that the SECURE Act provision is so new. Sure, would have been better to sign the documents first.

A quick one-page retroactive plan amendment fixes your vesting to 100%, at less of a corporate cost than it would be to track you down to repay. As long as you weren't a Highly Compensated Employee 😜

Agreed - I've seen SH plans that exclude all HCEs from the SH and others that only exclude Key Employees from the SH, which makes sense if top-heavy as non-Key HCEs must get TH minimum.

That is a great point that is often overlooked - if a non-safe harbor "plan" (401(a), 401(k), 401(m), etc.) satisfies nondiscrimination (401(a)(4), ADP, ACP) using a definition of compensation that satisfies 414(s) (such as 415 comp) then the definition of plan compensation used to determine compensation and benefits need not be separately tested and pass such test. A lot of times it is easier to just skip to testing using a safe harbor gross compensation rather than do a compensation test first and hopefully pass so you can test nondiscrimination using plan compensation. You're likely better off on your results using the safe harbor compensation anyway.

Also (let me just mention because I didn't realize for a long time) the matching contribution is not based on any compensation limit. So if someone makes $500,000 per year and defers $14,000, the match is also $14,000.

Salary deferrals only. Match would be on top of the 14,000.

Sure. That would also give the beneficiary more sheltered funds rather than a loan default/taxable event to the participant's estate. (Of course the default date may have accelerated upon termination of employment, too.)

Thank you

Yes, assuming your document permits it, you're fine. (I'm obviously assuming there are no other contributions than deferrals/SH match)

Some banking, insurance, and securities intermediaries scripted a rep to say that a retirement plan’s trust needed a little money so the trust would have a res (deliberately using lawyers’ Latin) and be established before December ended. The suggested token amount would be something more than an initial fee (arguably disclosed in the account-opening paperwork the customer didn’t read). The firm would collect that fee, and an undecided customer might go ahead with the retirement plan, figuring he might as well get what he had paid for.

Because that's how it used to be. Not only did you need to execute the document, you also had to establish the corpus of the trust, ie put money on deposit into the name of the plan. And if you were up against the year end, constructive receipt put the document in your hands for execution as long as it was sent to you by the last day; but you couldn't backdate deposit records and mailing receipts so you were depositing monies ahead of the execution of the document.

1) Yes, asking for an over payment is a legal requirement of the plan. They are required to protect all participants and those funds will most likely benefit the other participants in the plan. 2) If the shares are in an IRA there shouldn't be a taxable event. The harder part is you need to make sure you do NOT get a 1099-R for the money being sent back to the plan. I would ask the plan to write a letter to the IRA company to help convince them they need to send the money back to the plan without a 1099-R being issued. This is most likely going to be the hardest part for you. The IRA company will not like sending money out of an IRA without a 1099-R being issues. But this isn't unheard of so they should have a procedure. The question is does the person helping you know what it is? 3) The money in the IRA is not a qualified rollover so it can't stay in the IRA. Hope that helps.

Final assets $0 PYB = 1/1/2022 PYE = Date of final distribution Yes, Short plan year. Use 2021 form. If filing on paper cross out 2021 and write 2022. If filing electronically, should be no problem if PYB/PYE date are correct.