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I'm running into a problem and just looking for some insight.  We have a Plan that has immediate eligibility for the 401(k)/Safe Harbor Match, but we are looking to do 21 & 1 year for the Profit Sharing & Cash Balance portions.

I know the Safe Harbor Match (for everyone) gets factored into the 6% maximum deductible contribution for the employer contributions.

That said, for the people who are eligible for the 401(k)/Safe Harbor, are they factored into the rest of the testing for the PS/CB?  For instance, when we are doing the rate group testing are those people factored in?  Or do we only test for the people who are eligible for the Cash Balance Benefit?

I hope that makes sense.  Just trying to make sure I have all of my bases covered

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Through a convoluted series of events one of our participants was overpaid a (to me) substantial amount in the prior plan year.  Without going into detail, both our recordkeeper and our participant share responsibility for the error but I believe the participant was slightly more at fault.  The recordkeeper made a number of attempts to reach out to the participant but one repayment transaction was rejected by their bank and now the participant is no longer responding to requests to discuss.  No action has been taken by the recordkeeper other than the various attempts to contact.  To make it slightly more interesting, the offending transaction was an in-service withdrawal so they remain an active employee so there are HR considerations as well as legal ones.  There is some unrelated evidence that they are in serious financial difficulty.

In response to my oft-expressed concerns that our accounting now shows a negative balance, the recordkeeper made the business decision to make the Plan whole by paying off the negative balance.   Of course I am grateful for this (and appreciate that the recordkeeper is a very ethical organization) but I am troubled by the fact that so far this participant has gotten away with a large sum of money.   It appears that the recordkeeper has made the business decision not to take any more steps to recoup, as the expense of trying to do so might exceed the recovery.  

This is all still evolving and I believe our options are all still open. I have not yet involved legal counsel but am heading in that direction. I believe that, legally at least, the recordkeeper's attempts to recoup from the participant and their decision to make the Plan whole meets the requirements for correction and now that the Plan is whole we are OK from a legal standpoint but I am still troubled and looking for thoughts from people who may have experienced this somewhat unusual situation.   

• New Jersey does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans, other than 401(k) Plans. Specific plans that New Jersey does not allow taxpayers to exclude contributions to include, but are not limited to, plans under I.R.C. § 403(b), I.R.C. § 457, 409A, I.R.C. § 414(h), SEP, Federal Thrift Savings Funds, or Individual Retirement Accounts. Employer contributions to these plans receive tax-deferred treatment. In addition, both employee and employer contributions to SIMPLE IRAs, SEP, and SARSEP plans are included in taxable wages (neither receive tax-deferred treatment).

https://www.nj.gov/treasury/taxation/njit5.shtml

I came to learn of this through work on 457b plans.  I had no idea how extensive their bizzarness was, including employer contributions to SIMPLE IRA's and SEPs.  I am posting here because they do not even allow deductions for 403(b) Plans.  This is really insane.  Are people aware of this??

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Can a ESOP consisting only of cash (employer bought back stock) be "restated" as a profit sharing plan or a 401(k) plan? 

If yes, will the continuing plan be grandfathered and not subject to the automatic enrollment rules? 

Thank you, 

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I struggle with understanding the Casualty deduction reason for hardship withdrawals.  I am not sure if it applies in this case and am asking for any opinions or interpretations.

A bad storm blew through and damaged the roof of a 401k participant's house.  Not a federal disaster area and it was his principal residence.  The insurance will pay for the repairs but he has a $1000 deductible which he does not have.  Can her receive this from the 401k plan under the Casualty deduction reason?

Thank you

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I am trying to avoid the 60 day match notice with a discretionary match.  I'll be darned but I cannot find anywhere to cap the deferrals taken into account for the match. So for example we have a lot of clients that have no idea how much match they can afford for a given year. So we hardcode the match as a discretionary percentage of the first 4% of pay (could be first 5% of 6%, you get the idea).  FT william uses the term "Matched Employee Contributions."  I cannot find any where that I can cap that term at a given percentage.  Has anyone run into this same issue before? 

DB plan valuation and plan document with the following non-integrated formula

Unit Benefit for Past and Future service

85% of the participants average annual/monthly compensation multiplied by the participant's years of credited service prior to 12/31/2025 limited to a maximum of 25

Plus:  0% of participants average annual/monthly compensation multiplied by the participant's years of credited service subsequent to 12/31/2025 limited to a maximum of 25

Plan effective 01/01/2025

Owner only, but may add a couple non-hce's in the future.

Question, is this formula doable?

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In April 2025, my wife and I filed our federal income taxes for 2024, and she made an $8000 contribution to her traditional IRA (for 2024). Today I reviewed that return; our income had risen, and only $4420 of her $8K could be deducted, so instead TurboTax gave her a $3580 non-deductible contribution to her IRA. I believe it can stay there, and when she goes to withdraw the money, she has a $3580 basis on it, i.e. she will pay income taxes only on the gains. In practice this requires a lot of bookkeeping of regular and non-deductible contributions on form 8606. What a lot of work, potentially for decades, over a smallish error! Is there a way to put an end to the mix of tax types within the IRA , by making a withdrawal or Roth conversion or something?

A related question: IRAs are property of an individual, not a couple, even though we are married-filing-jointly. On form 8606, we are told to add the value of all "your" traditional IRAs. Is that a singular or plural "you"? (My IRAs are surely confusing since I have rolled over some 403b money into them recently.)

Hi

I usually do not exclude anything from the salaries but the following came up as never had to deal with.

Owner just gets normal salary and never a bonus.

All rank&file get salary plus bonus where the total is reflected on gross w-2.

Owner wants to exclude everyone's bonus for pension purposes. Does this fail 414(s)?

Thanks

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Sole Proprietor with a Solo 401(k) plan was with a brokerage firm that was bought by another brokerage firm. Apparently everything was very automatic in transferring investments etc. However, the sole proprietor had an automatic withdrawal of salary deferrals of $2,000 per month. When the new brokerage took over, the automatic $2,000 salary deferrals did not happen. It was always so automatic that the sole proprietor took a deduction for $24,000 for the 2024 year. Later, it was determined that none of the $24,000 went into the sole proprietor's account for 2024.

Does:

1. The sole proprietor just pound sand, suck it up, have his return amended and hand over the income tax, penalties and interest?

2. The sole proprietor have any possibility to deposit $24,000 now and keep the $24,000 deduction for the 2024 year?

Thanks.

1 person owner only plan.  The 1st RMD was distributed in 2024.  The Owner died in September 2025 and did not have a named beneficiary in the plan.  He was never married and did not have children, therefore, his death benefit will be payable to his Estate.  The Attorney and Financial Advisor want the funds distributed to his "Estate Beneficiary IRA account" as his IRA funds will be transferred here as well. The funds would then be distributed to the beneficiaries of his Estate to an inherited IRA.  I have never heard of this.

Wouldn't the funds have to be distributed to his Estate subject to income tax?