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Agree with Paul I, only her W2 pay from PC S-corp is compensation. If it's not subject to FICA and Medicare (or self-employment SECA) taxes (unless an exempt deferral such as a 125 plan) then it is not earned income and cannot be compensation for retirement plan purposes.

Certainly what the plan says about compensation will have a bearing on the answer, but the following observation may help focus on what appears to be a disconnect in Jane's argument. If I follow the description correctly: Jane's S-corp PC owns part of the LLP. Jane's S-corp PC gets earned income from the LLP which would be reported on a Form K-1 (1065) Jane's S-corp PC would send Jane as an S-corp shareholder a Form K-1 (1120s) which would identify her W-2 earnings, S-corp dividends and various other allocations of income and expenses. Jane receives a W-2 from Jane's S-corp PC. I expect that Jane's income on the W-2 is less than the income Jane's S-Corp PC received from the LLP by amounts listed in the 3rd bullet, and Jane would like to have the higher income considered as plan compensation. The amounts reported on Form K-1 (1065) to Jane's S-corp PC is not plan compensation, and only Jane's W-2 income from the S-corp is plan compensation. There always do seem to be some special rules somewhere out there, but the reporting path for Jane's income should be fully documented through all of the returns filed for Jane and her businesses. Jane or her advisors should be willing to provide that information to you.

You have 30 days after the year ends for after-tax amounts to count as annual additions for the prior year. So definitely too late for 2024 but perfectly timed to do 2025 amounts currently.

It's not a stretch to think the goal of the appeal is NOT "reinstate" but something else, likely money. The original poster should thank @Peter Gulia for his extraordinary list of questions. Of course, as he often states, he's not giving legal advice, but he gave some pretty awesome "non-legal" advice.

Interesting question. My position would be that the plan terms (including the carrier/stop-loss restrictions) still govern to require that the former spouse be removed from active coverage based on the divorce order. Plans (and carriers/stop-loss) almost universally do not extend eligibility to a former spouse. (Exception would be the Massachusetts law that allows former spouses to remain in active fully insured coverage in some situations.) I guess in theory the appeal could undo the divorce and effectively reinstate the marriage (although I've never heard of this happening), which would cause the spouse to again gain eligibility. If that happened, you would probably have to treat it as a mid-year HIPAA special enrollment event in the same manner as a marriage. But that seems very unlikely. It's almost certainly just the terms of the divorce that could be modified on a successful appeal. In short, my approach would be to consider the divorce final, remove the former spouse from active coverage, and offer COBRA rights. Any change to the divorce status from the appeal (unlikely) could be addressed at that point.

Suggest they can make the best estimate in January for the prior year and make the deposit by 30 days after the plan year ends or convert to a corp with W-2 wages and you can tell them the number for sure if they give you all the data timely. If they overshot what they could have done, apply what you can to the prior year, what you can't to the current year and make sure you adjust for that when you do the estimate again the next January. Let them know at some point they may run into a problem with that and may have to do a 415 refund due to estimating compensation if you can't apply all the overage in following year.

Soooooo, because someone else may not have do their job the contributions were not late? I agree with Peter, if this is what you are going to do or advise the client to do, you need to speak to legal to protect yourself. There may be an explanation, but you need to make sure its reasonable and can stand up to scrutiny. Edit: just re-read the OP. Why go through this for $1.31? Especially after it has already been reported and the IRS/DOL are aware of it (they data-mine the 5500s). Just deposit the $1.31 and move on.

Thank you for that context explanation. If you are the successor TPA, you might want your lawyer’s advice about ways to protect yourself.

The Plan Administrator never made up the earnings, they dispute that this was their responsibility as the TPA just simply forgot to do an ACH pull for the funding. They just didn't review the 2023 5500 well enough and questioned why the late payment was showing up on the 2024 5500 draft. So...what they want to do is amend the 2023 filing to remove the late deposit, as they believe it shouldn't have been there in the first place. I was more just wondering about whether it should have been reported at all. I would have said it should not have been, but I find that I am not always correct, so I wanted to see what other folks would have done when completing this 2023 5500.

That is what they bank on. Meet the new boss, same as the old boss....won't get fooled again - don't count on it. JQ Public duped again.

You’re right that politicians’ misleading expressions were deplorable.

I read the statutes for SECURE 2.0 but not for payroll matters, LOL. And my real point in mentioning is on behalf of John Doe manufacturing employee working 20 hours of OT per week, including double time on weekends and triple time on holidays, and coming to find out this is a fraction of what it was billed as. "We're not taxing overtime" is what I heard. John Doe did not read the statute, and if he just caught the headlines, this was never mentioned (and I probably watch and read more news then average American, though admittedly others read far more than I do).

austin3515, your second point shows why we should read the statute. (c) QUALIFIED OVERTIME COMPENSATION.— (1) IN GENERAL.—For purposes of this section, the term ‘qualified overtime compensation’ means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. (2) EXCLUSIONS.—Such term shall not include any qualified tip (as defined in section 224(d)). Internal Revenue Code of 1986 § 225(c), added by An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14, Pub. L. No. 119-21 § 70202(a) (July 4, 2025), 139 Stat. 72, 174 (2025), available at https://www.govinfo.gov/content/pkg/PLAW-119publ21/pdf/PLAW-119publ21.pdf [pdf page 104 of 331].

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I did see that the IRS actually did publish a draft W-4 on which employees can estimate their qualifying tips and overtime to adjust their withholding. Additional research told me that as a technicality, amending the W-4 in this way does not affect the legal definition of wages for withholding--only a change to 3401(a) itself would do that. So the W-4 just allows employees to request lower withholding but does not exclude qualifying tips and overtime from the definition. I suppose 3401a could be viewed as a starting point, from which the employee can make certain adjustments. Anyway, that is what I learned from google and AI. Curious if anyone can validate. Were you all aware that when they said "overtime is tax free" they meant just the "half" in "time and a half"? So for example, if the pay is $10 an hour, $15 for over-time, it is just the $5 extra that is eligible for the deduction. I did not realize that. I'll bet there are millions of hourly employees who did not realize that. No one ever clarified (that I ever heard), and now the exclusion from income is 1/3 of what was communicated. Anyway, I definitely had no idea so figured I would say something to you guys!

Whether a member’s K-1 from a limited-liability company reports income items, loss items, or some of each kind doesn’t necessarily tell you the fair-market value of the member’s LLC interests. If the LLC is taxed as a partnership, remember that different members of a limited-liability company might have different interests. One member might have only a guaranteed-payment right. Another member might have an income interest but no loss interest. Yet another member might bear loss interests, including those not borne by other members. Even if the whole company has a year’s loss or several years’ losses, that by itself does not mean that a particular member’s LLC interests lack value, or even that capital interests lack value. If an asset is not regularly traded on an exchange, doesn’t a third-party administrator rely on what the plan’s administrator says is the value?

Ask them for the fair market value of the investment?

You misunderstand the application of Norris. The ruling states that you cannot use different tables for males vs. females. You can use any table so long as it is reasonable for the stated purpose, and defined in the plan (ie, the "definitely determinable" requirement of ERISA), and you apply it equally for males and females. Using different tables for participants vs. beneficiaries is also acceptable (likely, it is advisable). The definition you quote is probably reasonable, but other reasonable tables are also possible. The Enrolled Actuary can provide examples of several different tables/updates.