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The pre-enactment plan had a 401(k) feature and is grandfathered. SECURE 2.0 did not say that any modification to a grandfathered plan had to be an EACA.

CuseFan - not the IRS or DOL, but the NLRB showed up and claimed a ULP against an employer that excluded the union from its retirement plans. We tried to explain to the NLRB that barring collectively-bargained employees from retirement plans is standard plan language, but they wouldn't back down. It was cray-cray (technical legal term when dealing with the NLRB)

It might be stating the obvious here, but *if* the plan sponsor determines that a restorative payment is warranted (under the guidance given by my esteemed professional colleagues above), the the plan sponsor is essentially *admitting* (at least the serious possibility) of a fiduciary breach and that breach essentially entails the selection of the SVF fund in the initial instance (with the possibility of an MVA.) While a restorative payment may solve the back end issue of a MVA, it leaves the fiduciary exposed for any other damages that an enterprising plaintiff's counsel may see for the entirety of the fund being in the plan. We never recommend a restorative payment (which is iffy in any event), and usually advise that the client seek an alternative (installment payments, a "put" or the like,) If the contract is benefit responsive, participant's generally will suffer no loss. Inconvenient, yup, but we do it all the time (both with respect to incoming business, and outgoing business using our SVF).

The Internal Revenue Code § 401(a)(4) and § 410(b)(3)(A) exclusions refer to “employees who are included in a unit of employees covered by an agreement [that] the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that retirement benefits were the subject of good[-]faith bargaining between such employee representatives and such employer or employers[.]” So, before a § 401(k) plan’s administrator decides to run coverage and nondiscrimination testing without the second union’s covered workers, one might read the collective-bargaining agreement. A collective-bargaining agreement that follows labor-relations norms typically has some chapter, article, or section with a heading that uses the word “retirement”. Or if you don’t see something like that, look for a sentence saying what topics the parties considered. It can be okay that a covered worker has no access to a plan with an elective-deferral arrangement if the worker is covered by some retirement benefit. That might be a union, multiemployer, multiple-employer, or single-employer defined-benefit plan. But if a collective-bargaining agreement says nothing about which retirement plan the covered workers participate in and lacks a recital that the parties bargained over retirement benefits, a tax practitioner might not assume the § 401(a)(4) and § 410(b)(3)(A) exclusions until “there is evidence that retirement benefits were the subject of good[-]faith bargaining[.]”

I have been away from this sort of admin for years but my recollection is (1) you can refund excess by 3/15 (avoid excise tax), (2) refund after 3/15 but before 12/31 (incur excise tax), (3) provide QNEC to pass test if current year testing, deposit by 12/31, or (4) if you do not correct by the end of the following year then a permissible EPCRS self-correction method is what you describe in (2). https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-the-plan-failed-the-401k-adp-and-acp-nondiscrimination-tests

Thanks. My point is that, even for a plan sponsor that uses an IRS-preapproved document, spending a few minutes at the plan-documents stage—to read the default-beneficiary provision, or even without reading to replace that default with the plan sponsor’s preference—can save lots of foolishness later.

You can’t defer more than you earn. You can have catchup contributions go above compensation only if there is an employer contribution to push the number up. But with zero compensation, that’s not an option either. Maybe he doesn’t deduct something this year so he has income to defer on?

Before one suggests asking the Labor department to clarify what “with a balance” means, consider the proverbial saying: “Be careful what you wish for, . . . .” Or another practical caution: “Don’t unnecessarily ask a question if you’re not sure you’ll get the answer you’d like.”