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The 2024 Form 5500 instructions for Schedule H line 4a refer to: “Amounts PAID by a participant or beneficiary to an employer []or WITHHELD by an employer for contribution to the plan are participant contributions that become plan assets as of the earliest date on which such contributions can reasonably be segregated from the employer’s general assets[.]” While failing to implement a participant’s elective deferral might involve tax-qualification conditions, a plan’s financial statements might not necessarily include an accrual or disclosure about an amount that never was taken from a worker’s pay. Consider whether the plan’s administrator might want its lawyer’s advice about whether the participant ratified a nondeferral, and, if not, what correction might be necessary, appropriate, unnecessary, or even unwise. Further, consider whether the plan’s administrator might want advice (perhaps independently of the independent qualified public accountant) about generally accepted accounting for whatever is (or isn’t) the plan’s receivable or contingent gain. The AICPA’s generally accepted auditing standards call for an IQPA to find that the Form 5500 report is consistent with the plan’s financial statements, or to note tolerable differences. Depending on the facts and circumstances, there might be room for an administrator’s Form 5500 reporting position that doesn’t necessarily interfere with an IQPA’s opportunity to render a “clean” report on the plan’s financial statements and related points. None of this is advice to anyone.

I’ve heard many employers’ paymasters lack software to apply the three age ranges of age-based catch-up limits. Some can sort for whether a participant will be 50 by the end of a year. But some can’t sort for whether an individual will be 60, or will be 64. Let’s hope designers of IRS-preapproved documents will, when the remedial-amendment time comes, allow users choices about whether to provide or omit the 60-63 catch-up.

The existing language in the pre-approved documents that I have seen incorporate the catch-up limits by references to code and regulatory which include the age 60-63 increased limit. If no action is taken, then the increase is automatic under these documents. A plan is not required to offer any catch-up contributions, and if it does offer them, it is not required to offer the maximum available catch-up contribution. The only requirement is the catch-up provision be universally available. A plan that does not want to have the age 60-63 limit should adopt an amendment or a formal administrative procedure documenting their position, and then make sure everything is included in the plan document when all the other recent legislation changes are required to be included in the document.

The document providers (ASC and FTW) I have talked to are taking the all-or-nothing approach absent guidance from IRS that says you can do one without the other. Pretty sure I have seen the same from FIS.

Thank you for your input.

Yes partly - and no not offerting in plan Roth Rollovers. I also have had 0 clients wanting to add their er contr. as Roth.

We are strongly discouraging our clients from adopting that measure.

If the plan does not address it, give the participant the choice, but make a deadline that is imposed so you can meet the 3/15 deadline if the participant does not respond. Then have the Plan Administrator make an administrative election as to how refunds will be handled absent an employee election: pre-tax first, roth first, or proration. Document election and follow that going forward.

Check the base plan document. Here's what our BPD says "Refunds. If the Plan permits Roth Elective Deferrals, the Participant may elect to have refunds made either from his Pre-tax Elective Deferrals or Roth Elective Deferrals or any combination thereof. Unless a Participant otherwise specifies, a distribution of Excess Elective Deferrals for a year shall be made first from the Participant's pre-tax Elective Deferral account, to the extent such deferrals were made for the year."

I find that surprising. But in that case, the plan administrator should adopt some reasonable and non-discriminatory procedure. This may include allowing participants to elect to have the refund taken from pre-tax or Roth contributions or both.

and that the document allows for the allocation in the manner you propose

If the plan document allows, you can always favor one HCE over another. Plans that cover only HCEs automatically pass testing. As Truphao points out though you will still make TH minimums if the plan is top-heavy. So in your example, of the owner getting max everyone else getting 0 is fine until your plan becomes top-heavy which could be immediately if its a first year plan with no other money in it, could be never if there is a 401(k) component and you have enough non-key HCEs contributing enough to the plan to keep it below 60%. And while you say this is a PS, you still need to look out for 401(a)(26) if it's a DB plan or DB/DC combo plan.

yes, but watch out for minimum TH requirements (if the Plan is TH).

I am going to pose this a little differently for clarification because my understanding is that if you use a safe harbor match to satisfy the ADP Test that you cannot double dip and use those in the ACP Test with After-Tax contributions. Contribution Only Used Once.Amounts included in the ACR can be taken into account only once. Therefore, any amounts cannot be taken into account to the extent such contributions are used to satisfy any other ACP test, any ADP test, or the safe harbor requirements of the requirements for SIMPLE plans. Similarly, if a plan switches from the current year testing method to the prior year testing method, QNECs that are taken into account under the current year testing method for a plan year may not be taken into account under the prior year testing method for the next plan year. [Treas. Reg. section 1.401(m)-2(a)(6)(vi)](iii) Qualified matching contributions used to satisfy the ADP test. Qualified matching contributions that are taken into account for the ADP test of section 401(k)(3) under §1.401(k)-2(a)(6) are not taken into account in determining an eligible employee's ACR.(iv) Matching contributions taken into account under safe harbor provisions. A plan that satisfies the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for a plan year but nonetheless must satisfy the requirements of this section because it provides for employee contributions for such plan year is permitted to apply this section disregarding all matching contributions with respect to all eligible employees. In addition, a plan that satisfies the ADP safe harbor requirements of §1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4 percent (31⁄2 percent in the case of a plan that satisfies the ADP safe harbor under section 401(k)(13)) of each employee's compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees. So for this example, let's say the ADP Safe Harbor Match is 100% up to 7% (this satisfies the ADP SH but does not satisfy the ACP Test SH - matches on deferrals above 6% and in aggregate is more than 4%). In this example, the match in excess of 4% could be used in the ACP Test, but you could not use the full 7% because the first 4% is the amount necessary to satisfy the ADP Test.