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A few points you might consider: Internal Revenue Code § 401(a)(9)’s tax-qualification condition sets a restraint about how much delay a plan may allow before the plan provides some involuntary distribution. Except as ERISA § 203 commands otherwise, a plan may provide an involuntary distribution sooner than a participant’s applicable age described in IRC § 401(a)(9). For example, a plan might provide an involuntary distribution by the last day of the year in which the participant reaches a 60-something age (if the participant then has reached the plan’s normal retirement age). A sponsor of an employee stock ownership plan might have plan-design or other reasons for providing a distribution in January rather than April 1. But if the ESOP’s shares are not publicly traded on a national securities exchange, consider whether January 1 is practical in the plan’s administration. Among other factors, how likely is it that the plan’s trustees will have read their appraiser’s report and concluded a December 31 valuation by January 1 or 2?

The primary responsibility likely will be driven by circumstances. For example, if the plan procedure is to allow a catch-up eligible HPE to make an election to defer x% and to make an election to defer up to the deferral limit or the deferral limit plus the catch-up, then this should be fairly straightforward for payroll to administer. On other hand, if a catch-up eligible HPE elects to defer only up to the deferral limit and in the following year the TPA determines the plan fails the ADP test requiring a refund to the HPE, and the HPE wants the amount to stay in the plan as catch-up, then it is the TPA that will have the information needed to treat the catch-up as Roth. Payroll will not know about this until well afterwards. By then, the HPE's W-2 was prepared and filed with the IRS. Further, the HPE may no longer be an employee when the amount of the catch-up/Roth calculation is known. How will this be reported? I'm sure there are other circumstances that could be complications. If the payroll procedure for an HPE is to keep an election for elective deferrals separate from an election for catch-up contributions, then it would seem logical that payroll would treat the catch-up amounts as Roth. If the HPE terminates before reaching a plan limit triggering the availability of catch-up contributions, then the question would need to be addressed if payroll's treatment was consistent with the plan provisions. Can't wait for some IRS guidance to be released. One third of this year has passed and the clock is ticking!

Yes, it was 26 years ago today that Austin (one of our message boards luminaries) burst upon the scene with the release of the first movie in the series.

I know next to nothing about 409A plans but it seems if they are paying the taxes and penalties on their mistake they are trying to "fix their mistake". It seems like they should also pay any fees you have with your CPA if you need to file an amended return because of this, but that's something you probably need to take up with them.

Gateway is not always 7.5%, it could be less. Having said that, as long as there is room for additional deduction, of course. However allocation for additional amounts will depend on how the plan formula is written under PS portion.

No issue. The gateway for a combo could range from 5% to 7.5% depending on the highest HCE rate, and that gateway minimum is simply the cost required to enable cross-testing of the DC component.

However, an excluded class in a 401(k) plan cannot be defined with reference to age or service. So for example a part-time employee who moves to full-time and then back to part-time, but accumulates a year of service in between, remains eligible for the 401(k) plan. This is pretty much the same as the rule for a 403(b) plan. This contrasts with a situation in which someone moves into a different class of employee. For example, if a plan covers only salaried employees, an hourly employee who becomes salaried and then reverts to being hourly would lose eligibility.

SECURE 2.0 also includes a provision (Section 327) that allows a surviving spouse as sole beneficiary to elect to treat their inherited interest in the plan as if they were the employee starting with distribution calendar years in 2024 and later (sort of like the rule that applies to allow IRAs inherited by spouses to be treated as if they were their own). If a spouse elects to treat their inherited interest as their own (as if they were the employee), this would change the date when RMDs are required to begin (to no earlier than when the spouse attains RMD age rather than 12/31 of the year the dead participant would have attained RMD age) and for purposes of calculating the RMDs (so they can use uniform lifetime table factor instead of single life table factor for years after the year of the employee's death). I think we need guidance from IRS on the following: Whether it's optional or mandatory for plans to offer this election to spouses. Exactly when is the spouse be required to begin if they elect to treat as their own? For example, would it be 4/1 after end of year the spouse hits the RMD age - as would be the case if they are actually treated like the employee, 12/31 of the year in which the spouse hits RMD age, or the actual date the spouse attains the RMD age? When exactly does the election have to be made by the spouse? Can spouse put it off until the earlier of when either the spouse or the participant would have had an RMD required? If the employee doesn't make an affirmative election and doesn't take an RMD in time based on the employee's birth date - would a deemed election apply as would be the case with an IRA inherited by a spouse? Such a rule could help spouses avoid RMD penalties in a lot of cases. Is this type of provision something a plan would have to include a provision for, or will plans be subject to some sort of default rule in the regulations unless the plan affirmatively says it will not apply? If a spouse elects to treat as his/her own and then starts before the spouse attains 59 1/2, would spouse's distributions then become subject to 10% penalty tax before age 59 1/2? I would think so, and that in order to avoid this possibility, it may make sense for the spouse to wait until after the earlier of when the spouse turns 59 1/2 or when the spouse would be required to take an RMD based on participant's age. What changes are needed to the special tax notice in 2024 or later for this rule? Can a spouse who treats their inherited interest as their own name a subsequent spouse as a beneficiary and can that subsequent spouse also elect to treat their account as their own? Can this rule be applied to a QPSA under a DB plan? I would think so, but typically QPSA is only payable as life annuity and spouse wouldn't get choice of optional forms like the employee and generally couldn't elect a J&S under 401(a)(9). Is it ok to only allow life annuity if spouse elects to treats as her own? If a DB plan is required to, or allowed to permit a spouse to elect forms of payment that provide for another beneficiary for life, are there any new incidental death benefit limits to watch out for? Does this rule mean that a spouse/former spouse Alternate Payee under a QDRO can also apply this rule to delay their commencement date? If the QDRO is silent, is the plan required to offer AP an election to treat account as her own if it offers surviving spouses such an election?

Being asked for a solution to uncashed checks, particularly for small balances, is like being asked for directions for walking through a minefield - blindfolded. Let's break it down. Is the participant "missing" or "unresponsive"? By missing, what has been done to confirm the participant's contact information? I suggest confirming the participant can be contacted before writing any checks. Free internet searches are notoriously not helpful because they return too many unverified hits. There is a low-cost, publicly available, no contract search service that charges $10 per search if you can provide the participant's ssn (be sure to follow the plan's PII policies), and claims something like a 99% success rate when you do. They have been 100% successful when I have seen it used, and results were returned within 48 hours. The $10 can be charged against the participant's account balance. If you can confirm the participant's contact information and either speak to them or get a response to a mailed or emailed notification there is money available, then the participant is no longer missing. If the attempts to locate the participant are unsuccessful, then the participant remains missing and the conundrum is what to do next. Addressing missing participants is a related but different topic commented further below. Let's move on to addressing the participant who is unresponsive. By now, we should know how to contact them, so send them an election form explaining they can make a distribution election if they respond within 30 days (recommend providing an explicit response date). Include an explanation of what happens if they do not respond which would be making a taxable distribution or moving to a default IRA depending upon the plan provisions and as directed by the Plan Administrator (recommend specifying applicable fees that will be charged). If the default is moving to a default IRA, make the move and consider the distribution as completed. If the default is making a taxable distribution, write the check, withhold the appropriate taxes, and send a notice with an explanation of what happens if they do not cash the check timely (most plans seem to issue checks that are valid for 180 days from the date of the check). The notice may say the check will be reissued, or the amount will be moved to an bank or similar account in the name of the participant (assuming you can find a financial institution amenable to hold this account). Depending upon the plan's policies and procedures, the notice can explain whether the amount potentially could be contingently forfeited under the IRS rules, or the amount could be charged administrative fees that will diminish it over time, or the amount could be escheated to the state, or some other fate that conveys the message "cash it or lose it". It also is worth disclosing that the amount will be reported on the Form 1099R, that the participant already paid taxes they should report on their personal tax return, and the IRS could ask about the distribution if the participant's personal tax return is reviewed or audited. Circling back to a missing participant. The PBGC said they will help, but only for terminating plans. The IRS lets a plan make a "contingent forfeiture" (distinguished from a "forfeiture"). The DOL has been the most inconsistent in providing guidance on what to do with a missing participant. Generally, the DOL seems to lean towards keeping the amounts in the plan until the plan terminates (which would then make it the PBGC's problem). I have had a conversation with a senior DOL investigator who did not recognize contingent forfeitures and was adamantly against the practice. Anecdotally, other DOL investigators have accepted contingent forfeitures if they are explicitly in the plan documents, significant efforts were made to locate the missing participant, and the policy has been applied uniformly. Did I mention navigating a minefield? DOL's karma is the SECURE 2.0 mandate for the DOL to create a national, online lost and found database no later than January 1, 2025. I suspect that this will look like a flavor of the PBGC service and will require plan's to go through a series of steps and even a commercial search service before the DOL will accept a missing participant's balance. We will see. Can't wait for the comment period to open up.