A plan came on with us earlier this year, this is our first time doing testing for them. Owner wants a projection of what it'd look like to max out profit sharing with new comp (they've never done profit sharing before). Right now their plan doc has 3 month wait, no hours or age requirement, and monthly entry for all sources, including safe harbor. Owner has two kids, 12 and 14, which get a small paycheck, defer some, and get safe harbor money. This causes some wild numbers in 401(a)(4) testing because of their age; the $330 of safe harbor received by one kid means I'd need to get 5 NHCEs up to ~27 EBAR. Essentially, there's no way to max out the owner without giving wild contributions to everyone else because of those two kids.

Our plan is to amend their document for next year to either have an age requirement or exclude HCEs from the safe harbor contribution, along with some allocation conditions and other small provision changes to make this much smoother next year. That said, is there anything at all we can do for this year to make this spread better? I've seen conflicting information about the use of statutory exclusions for 401(a) rate group testing & struggling a bit to wrap my head around if there's any way we can make this work. Any input would be much appreciated!

Can someone point me to annual participant notice requirements for 457(b) and 457(f) requirements?

Thank you. 

Our firm has a lot of owner only so we tend to have alot of mega Roth conversions.  I can't seem to find a definitive answer on what the limit is when the plan is ONLY doing after tax -> Roth.  I've read alot of places that if you are 50 and over, then the limit is $77,500 for 2025 but the examples always include deferrals/Roth.  What about when it's solely after tax?  I read an AI response that said if it's only after tax, then the limit is just $70,000 because after tax is not subject to 402(g):  

• Elective deferrals = pre-tax 401(k) deferrals + Roth 401(k) deferrals (salary-reduction contributions subject to the 402(g) limit).

• After-tax (non-Roth) contributions = a different bucket under §415(c), not subject to 402(g), and not elective deferrals.

Thanks!

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A 401(k) participant requested a hardship under 1.401(k)-1(d)(3)(ii)(B)(6), relating to the "repair" of the participant's principal residence, for costs associated with the removal of a tree that posed a danger of falling on the participant's residence (but had not actually fallen yet).  From a practical, policy perspective, I understand that it makes sense for the participant to take the tree down before it actually falls on the house.  However, I don't think this would qualify as a casualty loss under 165, and therefore wouldn't qualify as a "repair" eligible for hardship.  (See, e.g., Rev. Rul. 76-134.)  Do you all agree?  Other thoughts?

(As an aside, I realize that SECURE 2.0 permits self-certification, but in this case the participant volunteered the information, so the plan sponsor has actual knowledge.)

Is there a particular advantage to signing a new Cash Balance Plan for the current plan year by end of the plan year, typically 12/31. 

Or is it just as well to wait until prior to the tax filing deadline of the next year and signing retroactively?

Found a r/k who posts deferral transactions before the check date.  Basically, they process the contribution file when it comes in.

For example, they processed the 5/9/25 payroll on 5/8.

I didn't think they could/should do that, but they said it was ok.

Do you agree?

To help customers apply § 414(v)(7)’s constraint that a higher-wage participant’s age-based catch-up deferral must be Roth contributions, recordkeepers are asking an employer to deliver—in January, following W-2 files—a computer file that shows, yes-or-no or on-or-off, whether a participant had in the preceding year Social Security wages more than $150,000.

Everything I’ve heard so far suggests this is the mainstream method recordkeepers are doing.

Is there any big recordkeeper not doing this?

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Situation: H had an IRA. H died. W survived. She did not rename the IRA into her name as owner. She did not take any MRDs, even for those years she had reached and passed her RBD. W dies. The IRA balance is moved into an "estate account." Then, W dies. Her executor has  the funds in the IRA moved to an "estate account" and then, 1/5th each transferred to five new "inherited IRAs", one each for the five children.

How do we resolve the failure by W to take MRDs?

Were the funds taxable when transferred from the IRA to the estate account (since estates per se cannot be IRA owners)?

If so, is there a stock report I can run?  Do I ahve to get my backend team ro create a crystal report for this?

More questions:

I think maybe I'm asking if there is a rate of return report that can be run with ad hoc dates?

Could it be run on a plan-wide level but with participant detail?

The accounts are daily-valued in the Relius ecosystem.

A small employer offers only fully insured medical insurance to its employees and employees pay their share of the cost of coverage through a cafeteria plan.  One (and only one) highly compensated employee is provided with additional cash compensation for opting out of the medical coverage.

Does this violate the benefits portion of the cafeteria plan nondiscrimination tests?  If so, what is the consequence to the one HCE? 

Thanks. 

I have made the (not all all difficult) decision to retire at the end of this year. I have agreed to work a couple of days a week during the early part of next year to help out my employer while they hire a replacement, but it's a limited engagement. I'll be lurking on these boards for a while yet.

I'd like to take this opportunity to thank Dave and Lois for providing this magnificent resource - it has been a tremendous asset! I'd also like to thank all of you folks, past and present, for the invaluable assistance you have given to me over the years. I've certainly taken more than I've given, and your time, generosity, and expertise is appreciated more than you can ever know. It's not just the technical expertise, but the sounding board for discussions, sometimes griping (misery loves company) and humor in the face of statutory and regulatory foolishness that makes this such a great community.

I wish you all the best in your future endeavors (I'm trying hard not to gloat) as you continue in this business, and I hope you all have a great Holiday season! Take care, and again, a heartfelt thanks!!!

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Plan Sponsor has non-union and union compensated employees.  Union compensation is excluded from the plan.  One of the employees will have W-2 FICA wages of about $70,000 in non-union compensation for 2025 and W-2 FICA wages in union compensation of about $125,000 for 2025.  Is the union compensation included to determine if the employee's compensation is over $150,000 for Roth catch up for 2026?

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Plan granted SARs with exercise price below FMV.  Grant was in 2020, vested in 2021, 2022, and 2023.  No rights have been exercised.  Notice 2008-113 provides for correction only if correction is made in year of grant or by end of year following year of grant.  If no rights have been exercised, is it possible to still use 2008-113?

Also, now that we're in 409A land, what if the SAR grant satisfies all the requirements of 409A, meaning (1) specifies number of SARs granted (2) specifies exercise period (5 years from vesting date) (3) specifies exercise price.  Or, is this not sufficient since there is no specific exercise date, only an exercise period - 5 years from vesting.

Do we still have income at vesting? Or is this ok if otherwise satisfies section 409A requirements?  

Background:

• 403(b)(9) non-electing church plan
• Multiple employer plan
• The plan (not the 700 individual participating employers) sets the definition of compensation when it comes to calculating contributions based on a percentage.
• This one employer used the wrong definition of comp and consequently shorted deferral contributions for the employee since 2021 (yikes)

I am unsure what correction method is appropriate and didn't find anything specific in Rev. Proc. 2021-30. I also read a page on the IRS website that states the plan can amend the definition of compensation, but that does not seem reasonable with a multiple employer plan where there is one definition for all employers to follow.

How does the employer fix this? Can the employer provide an employer contribution for 50% of missed deferral portion? Is there something clear cut I am missing?

TIA for your responses.

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