Employer made a significant amount of mistaken contributions to retiree-only HRA trust.  The trust contains ERISA Section 403(c)'s prohibition on return of erroneously made contributions (mistaken contributions can only be returned if discovered within 1-year of error).  Here, the mistakes were discovered after the 1-year period.  Employer is not requesting a refund, but instead asking to "offset" future required contributions to the trust by the amount of the mistaken contributions.  Anyone know of legal support for the offset in a case like this?  Would the offset violate ERISA Section 403(c)?  

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I have a long time client that has both a 401(k) Plan and a Cash Balance Plan. These plans have been in place for quite a while and each has 1 -2 million in assets. Here's the problem, the defined benefit plan's assets consisted of all CD's. As they all became due during 2025, the proceeds from the CD's were mistakenly transferred to the 401(k) plan leaving the DB plan with zero assets. 

I don't see any good solution for this problem. If I was pressed, I would suggest transferring the assets back into the DB plan with an estimated income adjustment. Using this approach, how much risk would there be if the plan would be audited in the future? Could the risk potentially be as great as a disqualification of both plans?

I have a long time client that has both a 401(k) Plan and a Cash Balance Plan. These plans have been in place for quite a while and each has 1 -2 million in assets. Here's the problem, the defined benefit plan's assets consisted of all CD's. As they all became due during 2025, the proceeds from the CD's were mistakenly transferred to the 401(k) plan leaving the DB plan with zero assets. 

I don't see any good solution for this problem. If I was pressed, I would suggest transferring the assets back into the DB plan with an estimated income adjustment. Using this approach, how much risk would there be if the plan would be audited in the future? Could the risk potentially be as great as a disqualification of both plans?

Say you have a DC plan (ERISA 403(b)) covering both non-union and union employees, with a good faith CBA negotiated, etc., etc.

Plan, by its terms, requires a fixed employer contribution, NO allocation requirements for a plan year.

Employer is in financial difficulties, and union may be willing to renegotiate the CBA to remove or reduce the required employer contribution for 2026. But under the terms of the plan, benefit is already accrued.

I think even if union is willing to open up the CBA and renegotiate, they still can't overcome the ERISA anti-cutback requirements - is there any way around that? I'm not aware of one, but don't really deal with ERISA plans with union involvement. 

Thanks.

S-corp sponsors an ICHRA for employees.  It's my understanding that 2% shareholders of S-corp are NOT eligible to participate in ICHRA, even if they have W-2 comp (i.e., they are not treated as "employees" for fringe benefit purposes).  IRC 105(g), Notice 2002-45.  Alternatively, I believe medical insurance premiums can just be paid directly by S-corp on behalf of 2% owner.   Premiums are deductible by s-corp.   Those premiums are exempt from FICA/FUTA if the payments are "made to or on behalf of an employee under a plan or system that makes provision for all or a class of employees."  I believe this means that FICA/FUTA would not be required withholding on those premiums?  Not sure I'm understanding that rule.

Now assume one of the 2%shareholders is on Medicare and the S-corp will pay those Medicare premiums and put them in that shareholder's W-2.  1.)  Are those Medicare premiums subject to FICA/FUTA tax withholding?  Or just Federal withholding?  Would Medicare fall under the umbrella "made to or on behalf of an employee under a plan or system that makes provision for all or a class of employees."   Any clarification appreciated!

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Have a MEP that has been in effect for decades as a closed MEP, and has never with any problem.  Recently they allowed a firm that does not satisfy having the same business type which has been making the MEP closed, and I am concerned about the 5500 filing(s).  For example, the other firms are all "butcher shops" while this new firm is an automobile repair shop.  Anyway, does this mean every firm has to file a separate 5500 now, or does the plan continue to use one 5500 for the "closed firms" with the "open firm" the only firm that needs a separate 5500?

For tax years that begin on or after January 1, 2027, SECURE 2022 replaces the saver’s credit with the saver’s match. An eligible individual claims this “match” in her Federal income tax return. The US Treasury pays this as a contribution to the eligible individual’s applicable retirement savings vehicle, which the individual specifies (in her tax return, we guess). A plan that receives this Treasury contribution may be a § 401(k) plan, a § 403(b) plan, a governmental § 457(b) plan, or an IRA. For any of those, the Treasury’s contribution must be credited only to a non-Roth account.

A US Treasury contribution is made to a retirement plan only if the plan will accept these contributions, and segregate a separate subaccount for, appropriately credit, and tax-report regarding these Treasury contributions.

The US Treasury’s contribution is treated as the participant’s elective-deferral or individual’s IRA contribution, not as a matching or nonelective contribution.

But the Treasury’s contribution is not available for a hardship or unforeseeable-emergency distribution.

Internal Revenue Code (26 U.S.C.) § 6433, 31 U.S.C. § 1324(b)(2).

For an employment-based plan: Is there any big recordkeeper that might be unwilling to provide services to receive and distinctly recordkeep these contributions? Or will all of them fall in?

In a profit sharing Plan, a check was issued for the participant's balance to the participant pursuant to his distribution request. At some point (<180 days) after the check was issued, the participant passed away prior to cashing the check. The participant's designated beneficiary in the Plan was their surviving spouse. The spouse and their family is requesting that the check be reissued payable to her. To this point, we've advised the client that at some point when the distribution request was submitted/the check was issued, the funds became the participant's individual assets instead of assets of the Plan's trust, and so any reissues should only be made payable to the name of the participant or their estate to avoid liability for an incorrect distribution of funds. So any question of who the participant's beneficiary in the Plan was/is is irrelevant because the assets are no longer assets for the Participant's account in the Plan. Of course the Plan document seems to be silent on these very fine details.

The participant's family has spoken with a lawyer (presumably an estate lawyer), and he said that any assets would have to go through probate unless a check is reissued. My thought is whoever is the default executor of the individuals' estate (no will is known of, and this is the only significant asset) should be able to deposit the check in the participant's name into the deceased participant's bank account, and then the funds could be accessed by the spouse (presuming she has access).

Thoughts on my/the participant's family/the lawyer's reasoning?

Contributions made in error can be returned as a "mistake of fact" (if they qualify) within 12 months of when the mistake was made. But there appears to be an exception for multiemployer plans. Based on what I'm reading in the ERISA Outline Book, "IRC §401(a)(2) provides that a contribution made to a multiemployer plan due to a mistake of fact...may be returned within 6 months after the date that the plan administrator determines that it was made in error". 

If the plan sponsor of a multiemployer plan submits a contribution in error on 2/1/2026 and they determine it was made in error on 2/15/2026, does that mean the deadline to return it is 8/15/2026? Or do they still have the 12 months from when the mistake occurred? 

We have an asset sale and a SIMPLE IRA exists. As of the sale, the employees are technically terminated and then may transfer to the buyer. What are the options for the SIMPLE IRA assuming buyer does not want to set up a SH 401k plan - option 1 the SIMPLE IRA stays with the seller and essentially terminates since employees are terminating and there will be no payroll contributions, option 2 the buyer could take over the SIMPLE IRA during 2026? The problem with option 2 is that I do not see how the new buyer can amend the form 5305 or 5304 mid year - no room for a successor employer on the form. Is this a matter of a Board resolution or asking the IRA custodian to recommend the process? Thank you!

We have a 1 person Cash Balance Plan (owner only) that we are taking over.  I just want to make sure that they have compensation defined correctly in the Plan Document.  The choices given are:

1) W2
2) Code 3401
3) Code 415 Safe Harbor

Thanks in advance!

Will 2026 contribution limits be identical for a Keogh Plan and a 401(k) Plan? :

• $24,500 
• Catch-up contribution of $8,000 for employees 50 and older.
• Employees aged 60, 61, 62 and 63, higher catch-up contributions due to SECURE 2.0

Thank you.

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I am the TPA for a client with an over-funded cash balance plan.  Husband and wife participants. Both age 42.  His investment advisor is recommending that the plan purchase a life insurance policy.  I recall a time when life insurance was a popular choice in DB plans but primarily to fund contributions.  I no longer have any plans that contain a life insurance product and prefer to keep it that way.  His plan will need to be amended to permit this. Since I am not current on the rules, I would love to hear from some of you experts who can give me an opinion on whether it makes sense to purchase one from an over-funded CB plan?