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Paul I, thank you for your political and business observations. Based on the statute, I presume it’s the US Treasury that calculates, following the individual’s Federal income tax return, the amount of a saver’s-match contribution. Am I right in thinking a plan administrator’s recordkeeper might have little or no reason to know an individual’s § 6433 amount until the recordkeeper is asked to process the Treasury’s payment and credit individuals’ accounts? Or is there something I’m overlooking? The statute provides “such [saver’s-match] contribution shall not be taken into account with respect to any applicable limitation under sections 402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 408A(c)(2), 414(v)(2), 415(c), or 457(b)(2), and shall be disregarded for purposes of sections 401(a)(4), 401(k)(3), 401(k)(11)(B)(i)(III), and 416[.]” Rather, the essential condition is that this subaccount is not “distributable to the participant under section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(i)(V), or 457(d)(1)(A)(iii).” The statute does not preclude other in-service distributions. I’m aware there are many other difficulties, including some mentioned in SPARK’s November 4, 2024 comment letter https://www.sparkinstitute.org/wp-content/uploads/2024/11/Comment-Letter-on-Savers-Match-RFI-Final-11.4.24-.pdf.

Permissible if Pam works long enough to receive 7 paychecks during the year. The comp limit for 2026 is $360,000. Her maximum match is the lesser of 7% * 360,000 = $25,200 (calculated based on the plan match provisions) or 100% of deferrals = $24,500 (calculated based on plan deferral limit), so her maximum match is $24,500. Her maximum match limit is reached when her YTD compensation reaches 7% of $350,000 = $24,500. If she terminates before having earned $350,000 for the year, she will have an excess match that will have to be taken away with earnings (either at the earlier of a distribution or the end of the plan year). Note that Pam would not necessarily have to work 7 consecutive paychecks to get the maximum match. Note further that the plan should not have explicit provisions that apply the match formula strictly on a time period that is less than a full year. These issues would be avoided if the compensation in the match formula was not to exceed YTD compensation versus using the 401(a)(17) limit, and the plan has a true-up. Granted, this caps the match each pay period at a lower amount, but Pam quickly gets up to the max.

First, the Saver's Match has to survive 2026. The topic will start to gather attention based on the mandate for Treasury to report about it to Congress by July. The target recipients of the Saver's Match low- and moderate-income employees, replacing the pre-existing Savers’ Credit for low- and moderate-income employees who make contributions to retirement plans. There are elements rile up anti-DEI advocates such as the multilingual communications, and some analysis published in PlanSponsor magazine that concluded "Plan sponsors and participants both benefit from retirement plans implementing the Saver’s Match because adding it could reduce gender and race disparities in 401(k) balances, finds research from the Collaborative for Equitable Retirement Savings." IRS Notice 2024-65 says: "Section 104 of the SECURE 2.0 Act requires the Treasury Department to take steps to increase public awareness of Saver’s Match contributions, and to provide a report to Congress no later than July 1, 2026, summarizing the anticipated promotional efforts. The report must include a description of plans for: (1) the development and distribution of digital and print materials, including the distribution of such materials to states for participants in state facilitated retirement savings programs; (2) the translation of such materials into the 10 most commonly spoken languages in the United States after English ..." Assuming is does survive, a few recordkeepers at best will offer to receive and separately account for the match, and administer the more restrictive withdrawal provisions. No recordkeeper has access to the information needed to calculate the match or determine if the match calculation is accurate. Since retirement plans are not required to accept Saver's Match contributions and since IRAs can accept the Saver's Match, it is very likely that most plan recordkeepers will not accept it and refer clients to direct employees to IRAs. It is possible that some state-run plans built around IRAs would be more interested in pursuing this.

The amount of match in a plan is limited by the max comp allowed for the year. In a case of matching 100% of deferrals up to 2% of pay for 2025 would result in a maximum match of $7,000. It doesn't matter what the person's YTD comp is. You apply the match formula per period (in your example) until $7,000 is reached. THEN it stops. Another way to look at is is: Say this person uniformly earned $700,000 in 2025--half thru June and the other half thru the last 6 months: $350k per half year. What if they didn't start deferring until July 1? Are you not going to give them any match at all? That's absurd.

@OrderOfOps suggested steps are consistent with the IRS position that, for purposes of determining the year a distribution is taxable, a distribution occurs when the check is written and not when a check is cashed (and likely @ESOP Guy also had this in mind). The IRS took this position what asked about the year of taxation when a participant delayed cashing a check beyond plan year end. If this concept is applicable here, then the check represents an asset in the deceased participant's estate and would be dealt with consistently as any other assets in the estate. Mechanically, the check would be treated similar to checks that age out if not cashed timely.

You may have thought of this already but there are a lot of important side issues. I have had this happen before. if the first check was paid in 2025 and you reissue can you stop the 2025 1099-R? If not, will there be a 1099-R for the original check and whoever gets the new check? it seems like there shouldn't be two 1099-Rs. I know a lot of banks don't allow even the correct person endorse and deposit a check in a dead person's name so while maybe legal my guess that check can't get deposited. However, the person had the check so it is taxable income to the deceased. If no 1099-R ends up in their name that isn't going to be an issue most likely. After that it is an asset of the estate in my mind. My guess the plan needs some advice of an attorney like mentioned.

It is very easy to do something, but “undoing” is where the problems begin. So I am adding the following to the list: How easy will it be to obtain the annual market value of the insurance policy for actuarial valuation purposes? When the Cash Balance Plan is terminated, what will happen to this life insurance policy? (No — a typical “free” IRA will not be able to hold it.) Will the current actuary be willing to perform services for a plan that includes life insurance, or will you be required to find another actuary?

Putting insurance in a pension plan is usually a great idea if you are the agent making the sale. Your client should talk to their accountant and/or financial advisor (not the one selling him/her the insurance) and determine if it makes sense from a long term financial perspective. It might be a great idea, but more likely a its a horrible idea.

Box 1, taxable wages, includes the 2% S-corp shareholder employee health insurance premium of $16,293.32 since it is taxable to the employee, but does not include the pre-tax deferral amount of $20,150 since it is not taxable. On the other hand, Box 3 and 5 do not include the 2% S-corp shareholder employee health insurance premium of $16,293.32 since it is not subject to FICA tax, but includes the pre-tax deferral amount of $20,150 since it is subject to FICA tax. Statutory comp would include both of these items, so if you make the applicable adjustment to each box, you get to the same number (rounding to the integer) - Box 1: $96,143 + $20,150 = $116,293 and Box 3/5: $99,999.90 + $16,293.32 = $116,293. Note Peter's point about checking the document, though. It might exclude the 2% S-corp shareholder employee health insurance premium (e.g., exclusion of taxable fringe benefits) for plan/allocation comp purposes, in which case you would use $99,999.90 for computing your employer allocations.