This question is about investments used for individual-account (defined-contribution) retirement plans.

Leaving aside stable-value accounts and trusts, employer securities, and investments treated as nonqualifying assets for whether a plan’s financial statements need an independent audit:

Are there investments that impose a delay or other restriction on a redemption or withdrawal?

Or impose an exit charge?

I know that it is an allowed correction to let participants stay in a 401(k) plan if they were accidentally let in early, but would it be allowed to amend (prospectively) to let one employee in early by using his actual name in the eligibility waiver section of the document?  My opinion is that it could be discriminatory towards the other employees that were NOT let in, and I advised they do a waiver for all if they want to allow him in, but they don't want to do that.  This is an NHCE, but still doesn't seem allowable to me. 

Let's suppose an employee meets the 500 hours and completes a Election Form (from the plan) that he/she does not wish to contribute,or submits an Election Form to the trustees that he/she elects to make either a 0% or $0 contribution, but the plan contains the standard 1 year eligibility for employer contributions, would that employee NOT be considered a LTPT employee and therefore, the plan does NOT need to follow the LTPT rule?

Of course the employer conttibution rrquirement would still apply as well as  any required testing.

I do not see anywhere this question has been asked or answered.

A plan sponsor wants to change their traditional 401k plan to a safe harbor plan but are concerned about their contribution obligations should they suffer a down year or two in the future, so they are leaning towards a matching SH design.  I've heard that a safe harbor 'maybe' notice can only be used when the 3% SH nonelective contribution is being provided, whether the plan is a QACA or not.  One of their advisors, however, is insisting that you can use a 'maybe' notice for a SH QACA that provides matching contributions only, but this didn't sound right.  As I'm thinking it would be hard for participants to decide how much (or if) to defer if the employer can just rescind their offer for a match at any time during the year, I have to ask - am I correct to believe that the only type of SH plan (QACA or not) that can issue a 'maybe' notice is one that provides the 3% SHNEC?  Thanks in advance for any assistance.  

Have a 401(k) plan that has been co-sponsored by two related entities for many years (company A and company B). Each entity has about 20 - 30 employees.

Effective 1/1/2026, one of the entities will also sponsor an ESOP. No controlled group or affiliated service group issues. They will be slowly funding the ESOP with stock over time but eventually the employees of company A will own 100% of company A. Does this create any any problems with company A continuing to co-sponsor a 401(k) plan along with company B?

Thanks.

Roth IRA owner is trying to set up a trust to be designated as beneficiary of the Roth that will pay income to his surviving spouse until she dies. He is 80;  she is 75.

The Roth was created as a conversion from a traditional IRA in 2010 so it was formed more than 5 years ago. Spouse is designated income beneficiary of the trust for the rest of her life, and then his children and grandchildren become the income beneficiary. The corpus of the trust will be distributed when the children/grandchildren attain a certain age. 

If he dies now, is the spouse required to fully distribute the Roth IRA by the end of the required 10 years period? If the spouse dies before the 10 year period will the children/grandchildren be required to distribute the remaining balance of the Roth IRA within 10 years of the Roth owners death? 

Plan fails the ADP test.  Running the corrections in FTW.    Question - when including the earnings, do you net the fees or just use the earnings?  

Thanks!

Hi

Believe it or not, first time for this in recent memory.

Sole prop filed their return 2024 on 4/15/2025 with no extension.

Despite all warnings, made the pension contribution in May 2025 but took the deduction for 2024.

Net c was 350k and the DB contribution was 100k and taken as a deduction on 2024 return.

What can/should be done for 2024, if anything?

Non-safe-harbor 401k plan has a discretionary match. Compensation excludes bonuses. Both the ADP test and the ACP test pass using 415 comp and using comp reduced by bonuses. However, the 414s test fails by more than 3%. What, if any, correction is required?

Client has immediate eligibility for deferrals and safe harbor nonelective.  The client allocates profit sharing for those wo meet the 12-month 1000 hour Year of Service requirement as per the plan document.

I believe we can exclude from the gateway minimum those who did not meet the Year of Service but are receiving the 3% safe harbor by using the statutory exclusion.  And of course they are excluded from 401(a)(4) testing on profit sharing.  I know quick entry group must pass top heavy minumum which is not a problem since the safe harbor 3% is funded from date of hire.

Thank you.

Hi everyone, I've transitioned from a role in DB actuarial to governmental 401(a) plan administration and I'm trying to wrap my head around all the ways a governmental 401(a) plan differs from an ordinary 401(a) plan.

I have many questions, but the first I'll ask is about IRC Section 411(a)-4(b).  Does this language apply to governmental plans?

The plan I work for forfeits the employee contributions of a non-vested member if they fail to apply for a refund of employee contributions within five years of termination.  This is based on a state law requiring that any non-vested member apply for a refund within five years of termination.  The plan administration contacts any affected participants annually during those five years to inform them of the possibility of forfeiture and to recommend they apply for a refund.  In the case of forfeiture, the member can later apply to have the balance reinstated, but only if they provide an appropriate reason why they could not respond to our earlier communications.

The forfeiture of employee contributions unsettles me, even if the participant is notified beforehand.  We could have an out-of-date address if they moved when they terminated employment.  Am I making a mountain out of a molehill?

Thanks in advance!

We have a client that made the Safe Harbor Match to all of the Non-Highly Compensated employees.  When it comes to the HCE there are three, the owner, his wife and their son.  Obviously there's no such thing as discrimination to a Highly Compensated Employee and they don't have to make the Safe Harbor Match to themselves.

I assume there is no issue, then, if they want to provide the Safe Harbor Match to their son, but not themselves?

I don't see an issue, I just want to make sure I'm not overlooking anything.

Thanks!

So I have a plan that is sponsored by the husband's LLC and the wife's LLC is a participating ER.  With SECURE2.0, they would now have to file a Form 5500-SF instead of an EZ.  They share a pooled account and neither have employees.  I am trying to figure out who to answer questions on the Sch MEP and I think the issue may stem from Part 1 - type of Multiple-Employer Plan.  I checked 1c Pooled Employer plan but now I am thinking I should choose 1d Other and come up with a discription - maybe owner only plan that spouse's LLC adopted?

In Part II 2e I checked "yes" because the 2 owners are individual working owners.  There are no participants besides them, so 2f is 0% and 2g is $0, since all assets in 2d belong to the owners.

Any thoughts here?

A plan is terminating in 2025.

If a participant is over 65, do they have a Required Minimum Distribution (RMD)?

What if funds are rolled over into a 401 (k) plan?

Not my plan but having a discussion about it.

Offset DB plan terminated. Due to offset, out of 20 participants, only 2 owners have benefits. all others' benefits are offset by DC plan.

Document states, excess is allocated to the plan participants.

Questions raised and discussed (asking them as they are):

• Assuming the excess to be allocated to the participants, do all need to get an allocation?
• If yes, can there be any offset?
• Do both owners need to get an allocation or is it possible to give only one owner the additional allocation? Neither owner is at 415 limit.
• Can a qualified replacement plan (QRP) be set up now, plan provisions be amended for reversion to employer and excess transferred to it? Provisions have been around for more than 5 years.

Any other suggestions?

US Holding company owns several subsidiaries and just purchased a company in Canada.  The employees of the Canadian subsidiary are still paid via payroll through the Canadian subsidiary, but the company is funded via the US holding company.  Can the US holding company include the employees of the Canadian subsidiary in their 401(k) plan?  My gut says no because their income wouldn't appear on the surface to be US sourced, but I'm on the fence.  Anyone run into this before?  Thanks in advance!

I got a question from a client in regards to how they should be counting hours for a Plan Year.  Is it the actual hours worked from 1/1 - 12/31 for that Plan Year?  Or should it be based on the hours for the times that match the W2 (for instance, the first payroll on the W2 is all hours worked in the prior year but the pay date carries into January)?

Hopefully that makes sense.  Thanks in advance!

Hello. We have some layoffs happening at the end of the month, which employees have already been made aware of. If benefits also end on the last day of the month, are we able to provide the COBRA notices early (now for example) and will they be able to elect COBRA prior to their termination date on 6/30? Or is there a law that states they cannot elect COBRA until the qualifying event occurs (6/30 term date)?

Have a safe harbor 401(k) Plan. Deferral and match only. The plan fails 410b. If we run 401a4 test by allocation rate, it fails. Can we run it using benefit accrual rates to get it to pass? and not have to meet any minimum gateway requirements?

I know that the #1 best answer to my question will be "hire an ERISA attorney". But I'm hoping someone here has experience, and can relay their thoughts on my PITA situation. And please don't fuss at me too much; only looking for real life experience, not scolding. I hate non-qualified assets in a Plan, but this wasn't my idea.

Background info: 

-- Medical practice with 401k, Trustee is the doctor. 73% of the Plan assets belong to the owner (Dr), his wife, and his daughter, and the other 27% belongs to 9 NHCE participants.

-- 56% of assets are in a pooled account (Schwab) + 44% is in private stock (this valuation is part of my question though, so the 44% may not be accurate). All requirements are being met concerning the 5500/Sch I/audit reqm't.

-- This 401k Plan purchased the private stock for $2/share in 2019. The company prepared IRS Forms 5498(?) in 2022 stating its value as $17.57/share. There is going to be a valuation done this fall (b/c of a capital-raise) and most likely a sale of the company next year. (Thank goodness) So in this plan, the stock asset showed a large gain in 2022, to reflect the value of $17.57/share.

-- The doctor is now very worried the value will drop to $0, and wants to report its value on 12/31/25 as being back at the purchase price of $2/sh.

-- One of the 9 NHCE participants was paid out during 2024, and her vested balance was determined using the Schwab account + private stock at $17.57/share. She was paid out of the Schwab acct to avoid having to transfer shares of the private stock in-kind (would be very impractical). 

Question --

(1) Can we make future plan distributions by paying out their share of the Schwab account, but hold back their portion of the private stock to be paid once it liquidates? They'd get the 2nd payout as soon as that occurs.

(2) Should we reflect the asset's value back down at the $2/share? Or is the more accurate value the $17.57/share as reported by the company to its other share-holders?

There is no way to really know how much it's worth until it does actually sell. I personally believe the $17.57/sh valuation is the more accurate of the two since that is what has been used consistently in this plan since 2022, and in other reportings outside of just this plan since then as well.

My main objective, of course, is to be as fair as possible to the NHCE participants in the plan.

THANK YOU.