Hi,  Plan that is terminating has only one participant with balance in SDB and the security is currently not tradable.  the Plan sponsor wants to close the plan what option do we have? can the plan sponsor direct to move the SDB to a different fund? 

A 401(k) plan allows for Roth contributions. It also contains a provision limiting deferrals to 10% of participant compensation.

A participant contributes 12% of their pay in both ED (pre-tax) and Roth throughout the year (1/1/2025 through 12/31/2025). It is now just discovered and deemed an operational failure for not following the terms of the plan document.

The plan document does not outline how this should be corrected. The plan sponsor is self-correcting under EPCRS.

Is there any guidance on how to determine what excess to refund? (given that the participant deferred both pre-tax and Roth) Is it last in - first out? Is it prorated somehow? Or is there no guidance on this and the plan sponsor should just choose something and be consistent?

Background:

Non-Electing 403(b)(9) Church Plan 
2026 Limits apply

Participant age 50
Includible Compensation = $80,000
Deferrals = $8,000
Employer Contributions = $72,000

Question:
I will admit this seems so basic, but for some reason I am feeling perplexed today (sigh). Perhaps my understanding has been wrong all along, but I was originally under the impression that one did not have catch-up contributions until he/she exceeded the 402(g) limit.

Is there any instance where the employee deferrals in this scenario would be considered as age-50 catch-up contributions, avoiding an excess contribution scenario? Does the timing/order of the contributions matter? (For example, if first the employer contributions were made and maxed out the 415(c) limit, could deferrals made after that count as catch-up contributions?)

I read through section 414v and became confused by it stating [paraphrased], catch contributions are deferrals made that exceed ANY of the applicable limits, of which include limit on elective deferrals OR annual additions. In the scenario above, he exceeded the 415(c) limit with employer contributions. Does that point alone justify future deferrals in that year as catch-up?

"With respect to an applicable employer plan, catch-up contributions are elective deferrals made by a catch-up eligible participant that exceed any of the applicable limits set forth in paragraph (b) of this section ... 
paragraph (b):
(b) Elective deferrals that exceed an applicable limit—(1) Applicable limits. An applicable limit for purposes of determining catch-up contributions for a catch-up eligible participant is any of the following:

(i) Statutory limit. A statutory limit is a limit on elective deferrals or annual additions permitted to be made (without regard to section 414(v) and this section) with respect to an employee for a year provided in section 401(a)(30), 402(h), 403(b), 408, 415(c), or 457(b)(2) (without regard to section 457(b)(3)), as applicable.

TIA

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Hi,

Thank you as always for all the insights. The 5500 for a 6/30/2025 plan year end, is due by 1/31/26. This came out on Saturday. Therefore, the 5500 and the 5558 must be filed ON or prior to 2/2/26 (since 2/1 26 was a Sunday). We filed the 5558 on 2/2/26 ( today) with I file and got a validation error that stated " you have filed the form 5558 after the return's normal due date and may not be approved for an extension based on this form 5558 that was submited". I hope this is an error on their part and the extension will be approved? Thank you

Hoping that Mike Johnson doesn't see his shadow and give us 6 weeks of government shutdown!

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I have an issue I have not come across before. A (new) client sold his home healthcare company in 2023 in a membership interest sale. The business offered a Cash Balance Benefit Plan to its employees. The Benefit Plan was to continue after the sale. The seller made (on bad information) a high dollar value ($250k) contribution to the Benefit Plan after the sale was completed. The parties did not complete the paperwork to make the change of the trustee and employer under the benefit plan until the end of 2023. For the purposes of the Plan, when the contribution was made, the seller/contributor was still the "employer" under the Plan. The Plan contains a provision stating: 

15.02 Return of Employer Contributions. Upon written request by the Employer, the Trustee must return any Employer contributions provided that the circumstances and the time frames described below are satisfied. The Trustee may request the Employer to provide additional information to ensure the amounts may be properly returned. Any amounts returned shall not include earnings but must be reduced by any losses.

            (a) Mistake of fact. Any Employer contributions made because of a mistake of fact must be returned to the Employer within one year of the contribution.

            (b) Disallowance of deduction. Employer contributions to the Trust are made with the understanding that they are deductible. In the event the deduction of an Employer contribution is disallowed by the IRS, such contribution (to the extent disallowed) must be returned to the Employer within one year of the disallowance of the deduction. 

Seller believed he could deduct the contribution but was mistaken about this. He has since demanded the return of the funds many times. Buyer has not responded to the demands and threats of litigation.

Although the sale of the business included the Cash Benefit Plan, that contribution was not in the Plan at the time of the sale and was not bargained for in the transaction. The Buyer has failed to comply with regulations and was dropped by the third party administrator as a result, about 1 year after the sale of the business. Client's previous attorney sent a demand letter and received no response. I did the same and was told they would be responding, and since have received no further response. 

If anyone has dealt with anything remotely similar or has any suggestions on proceeding, I would be grateful. 

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I'm sure this has been asked.  I have an owner who is terminating his small 4-employee Profit Sharing plan, and turns 73 in 2026.  typically we would make sure that a participant takes their (generally already existing annual) RMD prior to rolling the remaining funds, however he technically has until 4/1/27 for the 1st RMD.  Is it ok to let him defer and allow all monies to transfer to an IRA now?  this is assuming he may want to defer, and I'd like to have an answer ready, partly for myself and any future scenarios.  He may not care and want it this year.  He has a significant balance so may not want two taxable required distributions in 2027.

thanks in advance for any insight!

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