Background: 403(b)(9) non-electing church plan, participant wants to convert his pre-tax money ($10K) to a designated Roth account within the same plan.

The plan is getting hung up on "conversion" vs "rollover" when there is no distributable event. I only seem to see the term "in-plan Roth rollover (IRR)" these days, and information I see about "Roth conversions" is generally associated with an IRA to Roth IRA. The 1099R instructions state: An IRR is a rollover within a retirement plan to a designated Roth account in the same plan. Yet, there is no plan consensus. 😕

Three scenarios:

A - Participant is under age 59.5, still employed and contributing.

B - Participant is under age 59.5 and severed from employment.

C - Participant is over age 59.5.

It is agreed that box 2a would be 10K, but there is disagreement as to how this transaction is to be reported in box 7 on 1099R and I am hoping someone could offer clarity (TIA). 

What is the appropriate code(s) for box 7 and is it the same in all three "in-plan" scenarios? 

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This is for a cash balance plan, so QJ&S applies.

Participant J and spouse S got divorced in 2016.  There was no QDRO because as part of the divorce, S waived her rights to J's benefits (kind of...), so nothing was ever provided to the plan sponsor or us as TPA.  We never knew or cared about this.

Fast forward to now and we're terminating the CB plan.  J calls us because the standard distribution package asks for the spouse to sign if married.  J says that he was married, but now he's concerned because in the divorce paperwork, it clearly says that S waives her right to J's benefit in the 401k plan, and that J attests that he is a participant in no other retirement plans.  Like many participants, J didn't understand what the CB plan really was.

[It's not relevent, but at the time his balance in the 401k plan was $20K and his lump sum benefit in the CB plan was $3K.]

Now J and the plan sponsor are wondering what to do.  Obviously, the best answer is "check with an attorney".  I told them without a legal opinion or a QDRO, we can't split J's CB payment.

Any other suggestions?  Thanks.

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An individual worked for 2 unrelated employers in 2025 and deferred into separate 401k plans. They deferred $15,000 into Plan A and $15,000 into Plan B. They are not catch-up eligible and they need a 402g refund of $6,500.

Based on what I am seeing in the regs, the individual ultimately determines which plan holds the excess. If you go by the last-in, first-out method - Plan B would issue the refund. But, Plan B has a very generous match and the individual would have to forfeit some of his match if the refund comes from Plan B.

Can the individual choose Plan A as holding the excess? Or, can they designate a portion of the excess from Plan A and a portion from Plan B? For example, can they request $3,000 to be refunded from Plan A and $3,500 refunded from Plan B?

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While calculating the annual true-up match, a safe harbor 401(k) plan recently determined that the value of the imputed income for non-cash fringe benefits was incorrectly included in Eligible Compensation when calculating employer matching contributions during 2025. These amounts should have been excluded from compensation according to the plan document. The amount of the employer matching contributions attributable to the error (let's call them "excess matching amounts") for an individual participant ranges from $20 - $80.

My interpretation of IRS ECPRS rules is that these are Excess Amounts under Section 5.01(3)(a) and do not need to be forfeited under Section 6.02(5)(e) if the Excess Amount is under $250 for an individual participant. But we are getting significant pushback from the recordkeeper who is insisting that negative adjustments must be made to participant accounts to remove the excess matching amounts. We have gone back and forth and they keep insisting there is no de minimis correction amount (which I know is accurate for missed contributions, but that's not the situation here). Am I missing something? Is my interpretation incorrect?

• Section 5.01(3)(a) states that an Excess Amount includes “...a contribution, allocation, or similar credit that is made on behalf of a participant or beneficiary to a plan in excess of the maximum amount permitted to be contributed, allocated, or credited on behalf of the participant or beneficiary under the terms of the plan...” 
• Section 6.02(5)(e) says, "Generally, if the total amount of an Excess Amount with respect to the benefit of a participant or beneficiary is $250 or less, the Plan Sponsor is not required to distribute or forfeit such Excess Amount. However, if the Excess Amount exceeds a statutory limit, the participant or beneficiary must be notified that the Excess Amount, including any investment gains, is not eligible for favorable tax treatment accorded to distributions from the plan (and, specifically, is not eligible for tax-free rollover).”

If you agree the excess matching amounts are Excess Amounts that do not need to be forfeited because they are under $250, and the plan sponsor chooses not to forfeit the amounts, is there any impact on the plan's safe harbor status? Does it matter if only HCEs received these amounts? 

TIA for your input!

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A normal 50 sole proprietor client in 2025 who is the sole participant of a 401(k) plan. Client is not participating/deferring in any other plans.

Below is how we calculated the contribution breakdown for 2025, to simplify the numbers we are using $23,500 as the net Schedule C income after SE taxes:

• 25% PS contribution: $4,700
• Deferral: $14,100 
• Catch-up: $4,700                    
• Total contribution is $23,500 and the earned income for the plan is $18,800

Question:

So the net maximum contribution is no different than had the participant made $23,500 401(k) and no employer contribution.  Do you agree the maximum total deductible contribution for this owner is $23,500?

For better or worse, we made a call early on after the enactment of Secure 2.0 to have our clients use the increased force out limit of $7,000. We informed them of same and have been administering the plans accordingly, figuring we'd have been able to get the amendments done over a fair span of time. When the formal amendments from our doc provider not coming until December 2025, we've been in a pinch for time to get those done. On top of that, the Cycle 4 DC restatement window opens later this year. We're not thrilled about having to complete the amendments and then immediately restate the documents for everyone. 

Has anyone heard any rumblings of an extension on the amendment deadline to coincide with the restatement window? That would make a lot of sense and make my life MUCH easier for the next 12-16 months. 

I'm curious what people are doing in practice right for 5330 filings.

Are you still filing paper 5330s and relying on the "lack of authorized vendors" documentation? Or has your firm found a workable e-file solution? The IRS list still shows basically one authorized provider — has anyone actually used them, and how was the experience? Also curious whether firms are absorbing the preparation cost or passing it to the client, and whether anyone has pushed back on the IRS or their software vendor about the lack of a straightforward filing path. It feels like this has been "coming soon" for a couple of years now.

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Would anyone happen to have a 401(a)(4) test on an Excel spreadsheet? I had one a math/Excel genius put together years ago but it's not working correctly.  It saved time from entering and reentering numbers into Relius.  TYIA!! 

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For the 2022-enacted “saver’s match”, Internal Revenue Code § 6433 provides the Treasury pays the credit “as a contribution” to the eligible individual’s applicable retirement savings vehicle.

Whether (i) an eligible retirement plan or (ii) an Individual Retirement Account or Individual Retirement Annuity, a plan or an IRA is not an applicable retirement savings vehicle unless it “accepts contributions made under this section[.]”

I.R.C. (26 U.S.C.) § 6433(e)(2)(C) https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap65-subchapB-sec6433.htm.

Could a plan sponsor design a plan not to accept a § 6433 contribution?

If so, what factors might influence a plan sponsor’s decision-making about whether to allow or refuse saver’s-match contributions?

A § 6433 contribution gets some treatments and restrictions that could be different from those of other elective-deferral amounts. Does this affect anyone’s analysis and decision-making?

Accepting saver’s-match contributions likely requires yet more separate subaccounting. Does that affect decision-making?

Imagine a plan easily would meet all coverage and nondiscrimination conditions without accepting § 6433 contributions. Might that affect decision-making?

What else should an employer—or a service provider—think about?