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Thanks all. We did the first couple with the "a" but have since modified it. Update - we use FT William for our 5500 software. Their system instructions, (which for this question are taken from the 5500 form instructions) do NOT specify that the "a" must be used. Yes, when you enter the number Qxxxxxx, it flags it as red, and when you go out to edit check, it adds the "a" to the number on the form. We've sent a question to their support folks (who are outstanding) to ask about this. I will let you know what they respond. Also, in case it matters, we are talking about a 5500-SF. I don't know if similar issues arise on a Schedule R. 10:00 AM - excerpt from FT William response - there was a bit of back and forth - but they are our 5500 software provider, so we'll do what they say! "EFAST2 is programmed to only accept the input when formatted as Q123456a."

I fixed match required by the document can exceed 4% of compensation and still satisfy ACP if it meets the other requirements in the code. It's a discretionary match that can't exceed 4% of compensation and still satisfy ACP.

JRN, that was the case prior to the SECURE Act. The plan itself needed to be adopted by 12/31, but contributions could be made until the employer's tax-filing deadline. The original SECURE Act allowed the plan to be adopted by the tax-filing deadline and still accept deductible contributions for the retroactive year. That said, I agree that backdating the sale of stock is problematic.

I am not a fan of filing without the audit, but I may be in the minority. Below is a great discussion of this question.

ahhh...you know me too well....:)

Is there a reason why it wouldn't satisfy the ACP safe harbor? I agree that if it is a discretionary match on top of the fixed safe harbor match it wouldn't work. But as a fixed safe harbor match I'm not seeing it exceeding any limitations. From §1.401(m)-3(d)(3) "(3) Limit on matching contributions. A plan that provides for matching contributions satisfies the requirements of this section only if— (i) Matching contributions are not made with respect to elective deferrals or employee contributions that exceed 6% of the employee's safe harbor compensation (within the meaning of § 1.401(k)–3(b)(2)); and (ii) Matching contributions that are discretionary do not exceed 4% of the employee's safe harbor compensation." https://www.law.cornell.edu/cfr/text/26/1.401(m)-3

You will be 73 in 2025. If you are an owner, or terminated in 2025 it is due 12/31/2025 or 4/1/2026. Or someone can correct me...

1) it is for a non-safe harbor match 2) the client wants an annual true-up but doesn;t feel like they should be obligated true-up for the portion of the year that participant was "too lazy" to fill out the forms. I'm paraphrasing but that is the logic. I am reminded of something I learned a long time ago which is clients want they want even if we don;t think they should want it 🤣 The question at hand is, is it legal. And of course I cannot run ADP/ACP testing based on that definition of comp. I would need comp as a participant based on the plan provisions to comply with 414s.

I note that 401(k)s do not backdate documents all the time. That is a scary statement. So, while I cannot address your question, I will address your statements. Only under very limited circumstances can a plan sponsor retroactively adopt 401(k) provisions, and this is newly available under SECURE 2.0. Retroactive 401(k)s are permitted beginning with the 2023 plan year for Schedule C and K-1 filers who have no common-law employees. This is permitted with an unextended filing deadline in 2024. SECURE 1.0 introduced retroactive adoption for employer contribution only plans effective beginning with the 2020 plan year. While the funding deadline for retroactively adopted DC plans is the due date of the entity tax return for the applicable plan year, which includes extension, the extended funding deadline for retroactively adopted DB plans is 8 1/2 months following the end of the plan year. Be careful about quoting calendar dates. Not all plans/plan sponsors are on a calendar year cycle, and different entity types have different filing deadlines. Prior to the enactment of the SECURE Acts, all qualified retirement plans were required to be adopted by the last day of the applicable plan year, and 401(k) was a prospective provision within the plan document (and still is, with the exception noted above). Retroactive adoption and backdating are very different. Retroactive adoption is permitted under specified circumstances. Backdating is always fraud.

Your segment rates for 430 should be 5.03/5.27/5.59, because the first two 404 rates fall within the 95%-105% corridor of the 25-year average segment rates. ..... Jeff

And if the HCEs get their 3% as profit sharing rather than as the safe harbor nonelective, you get to impute disparity on it when general testing with other benefits. You'll appreciate that difference exactly once in your career but it'll be worth it!

To fit Paul I’s suggestion about classifying a payment as something other than a contribution: The plan’s administrator might want its lawyer’s advice about whether the amounts to be restored to participant accounts might be a restorative payment. 26 C.F.R. § 1.415(c)-1(b)(2)(ii)(C) https://www.ecfr.gov/current/title-26/part-1/section-1.415(c)-1#p-1.415(c)-1(b)(2)(ii)(C). That classification might fit if the plan’s administrator arguably breached ERISA § 102 or § 404(a)(1) in communicating (or failing to communicate) the plan’s provisions, or arguably breached a fiduciary responsibility in instructing the service provider. A fiduciary’s breach need not be proven or conceded; it is enough that there is “a reasonable risk of liability[.]” If a restorative payment meets the reasonable-risk condition, is allocated to restore the harm that follows from the fiduciary’s arguable breach, and meets further conditions the rule specifies, it is not an annual addition. Thus, it does not count in measuring a § 415(c) limit. Likewise, it might not count in a coverage or nondiscrimination test to the extent that the test looks to annual additions. Because the participant does not control a restorative payment, it should not be treated as an elective deferral, and so should not count for a § 402(g) limit, or for a coverage or nondiscrimination test that looks to elective deferrals. This is not accounting, tax, or legal advice to anyone.

Basically run the test results twice, and merge the proper "halves" (allocations / accrual) as appropriate for delivery to file/sponsor.