We have a participant who is asking if this situation falls under a Hardship:

Due to a legal divorce, the participant has to move out of their house and needs a deposit for an apartment (first and last month's rent).  

It's not purchasing a primary residence, so I wasn't sure if this would apply.  Thanks in advance for your input!

We have a Cash Balance Plan that froze it's benefits early in 2025 (before anyone incurred 1,000 hours).  

Generally they have been making the 7.5% Profit Sharing contribution, in conjunction with the Cash Balance Contribution.  My question is, with the Cash Balance frozen are they still obligated to make the Profit Sharing?  Or is that back to a discretionary contribution and they can make any level since there's no Cash Balance contribution being made (there is no requirement).?

Thanks in advance!

We have a prospect that has a current 401k Plan in place with safe harbor match, new comp profit sharing.  The employer terminated several of the younger employees and now doesn't like the new comp allocation. 

Any thoughts about not making a discretionary contribution in the 401k, instead establishing a new retroactive PSP, grandfathering all current participants and not including a last day rule so those younger employees would be included?  Is there a trap I'm missing?

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I was just reading something and came across a note I had never seen before.  Is it true that if the Plan is covered by the PBGC, the 6% limit on employer contributions into the Profit Sharing Plan doesn't apply?

We always adhered to the 6% rule, even for PBGC Plans, but what I read seemed to imply that it wasn't the case.  So I just wanted to make sure I was reading this right.

Thanks in advance

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Can you make an amendment to exclude HCEs from being eligible for a Safe Harbor plan (effective 1/1 and amended at least 30 days before beginning of the year)? These HCEs already met the plan's eligibility requirements.

Thanks!

A deferred compensation plan allows a company's directors to elect to defer a portion of their director fees.  The deferred amounts are distributed upon the earlier of a 409A change of control or a director's separation from service.  At the time of an election to defer, the director can elect to receive payments upon a separation from service either in a lump sum or in annual installments.  The plan provides that if installments are elected, the number of annual installments will equal the number of full calendar years the director was a participant in the plan, up to 10 installments.  So, for example, if a director has a separation from service after 6 years in the plan, he or she will receive 6 annual installments, and if the director has a separation from service after 12 years in the plan, he or she will receive 10 annual installments.

This seems like a violation of the toggle rule because it provides for different times and forms of payment for the same 409A payment event, and I don't believe that any of the exceptions apply, but I'd love to entertain an argument that it's permissible.

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This is too simple, but here goes:

Participant has a $50,000 vested 401k account balance.  They take a maximum loan of $25,000 and have no other loans at the time

A few days later, they realize they need more $$$ and wish to take a second loan (plan allows for this).

Lets say the account balance is static and in a few days, the vested account balance is now $25,000 (after the initial loan) and no loan repayments have been made yet.

Can the participant take a second loan for $12,500 (50% of $25,000)?

I'm sure the answer is "No", but the above makes sense in a weird way.

Any comments are appreciated.

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2 separate one-person calendar year plans terminated and distributed assets in 2025.

Both plans received interest/dividends at the last moment that were not able to be distributed by 12/31/25 and ended up with balances.

• Plan 1 was $0.50.
• Plan 2 was $3,500.00.

Both plans managed to zero out by 1/31/26.

Both plans have asked to incorporate those amounts into 2025 distributions with the following implications:

• Form 1099-R's would be amended
• 2025 Form 5500 would be Final

I think we can live with doing that for Plan 1, but Plan 2 is more questionable. We are more comfortable with a 2026 Final 5500 but the client was promised (by the Advisor) that would not be necessary.

Just looking for thoughts on whether there is a de minimis for this situation of when to combine it for prior year?

We just finished a brutal plan conversion. The plan was on Guideline and went to accrue during our blackout. 

All of the conversion assets were sitting in cash for 31 days, which is absolutely unacceptable to me.

For those who are more familiar with the recordkeeping side, could you help me understand how this could happen? The RK said they didn't have all the conversion files, blah blah blah.

1) How many plans are converted in kind vs sold ->Wire->Reinvest?

-And why aren't all plans in kind?

2) What can I do in the future to prevent this from happening? Just send the RK daily emails asking for updates when money is in motion?

What is your guys process?

Client has 105 account balances (125 participants) at the beginning of the plan year.  I am assuming we can use the 80-120 rule to continue filing the 5500-SF until the number of account balances exceeds 120 as of the beginning of the plan year.  Any input would be greatly appreciated.

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