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Director of National Accounts and Partnership Sales- Retirement Plans
Account and Client Manager - Retirement Plans
Compliance Analyst
Loss of safe harbor status
Plan is intended to be a safe harbor plan. It defines compensation to exclude bonuses. Most of the time, we would assume this is acceptable under 414(s), because bonuses are typically received disproportionately by HCEs. But due to unusual circumstances, this turned out not to be true for 2025, a fact which they discovered only after 2025 ended.
My assumption is that this eliminates safe harbor status for 2025, and that they must now run ADP tests and take the normal steps to correct. But is this correct? "Dropping safe harbor status" is supposed to be prohibited mid-year, but would this be considered dropping safe harbor status or never having had it? And if this would be considered an impermissible dropping of safe harbor status, what would the correction be, anyway?
Also, what happens for 2026? Are they precluded from making changes for 2026 on the theory that it is a safe harbor plan for 2026 unless the compensation definition also proves to be discriminatory in 2026? In particular, can they remove a top paid group election from the plan and/or change the definition of compensation for 2026?
Independent Contractor turned Employee
We have an owner only plan that recently went through a Department of Labor and Employment Unemployment Insurance Employer Services Audit in 2025. The audit was for 2023. It was determined that the 1 Independent Contractor was actually an employee. The client paid the necessary taxes and began treating them as an employee for the remainder of 2025. So for 2025, the Independent Contractor turned employee received both a 1099 and a W-2. Is it reasonable for the client to list the employee's hire date as the audit close date since this is when the employee began receiving W-2 wages?
Employee Benefits Attorney
Mid year amendment to safe harbor plan
Hello - just wanted some clarification on this issue. A current safe harbor plan provides for an enhanced safe harbor match of 4% and use a payroll computation period. Sponsor wants to increase it this year to 5%. What are the mid year requirements - 30 day notice, the increase must be retroactive to 1/1/26, can the plan do a true up match retro to 1/1 and then continue with the payroll match going forward, or does the match computation period have to change to annual for the remainder of the 2026 plan year? I appreciate your thoughts!
Director of Total Rewards
2 separate DB Plans
Hi,
Two corps are a controlled group. Therfore, one DB plan can be opened that will cover both entities. Can the following be done instead?
For easier record keeping, etc. Open a DB for each entity and cover each entity separately. The owners (Hcs) are not getting above the 415 as they are covered only in one plan and the employees of each entity are all properly included. Thank you.
Deemed Roth Elections and Inadvertent Catch-up
There has been some back and forth regarding the Deemed Roth Election and how it interacts with a participant’s affirmative election not to make Roth catch‑up contributions. Our understanding is that the Deemed Roth Election is an administrative option that can be applied when a participant has not made an active election, allowing the plan to automatically designate catch‑up contributions as Roth.
If a plan fails ADP and a portion of the excess deferrals is recharacterized as catch‑up contributions, how should Roth treatment be determined? Specifically, does the participant’s prior affirmative election not to make Roth catch‑up contributions override the Deemed Roth Election? Or would the participant need to make an election at the time the catch‑up amount is calculated to determine whether it should be treated as Roth (assuming the contribution was originally pre‑tax and exceeds $250)?
Ultimately, we are trying to understand whether this introduces an additional tracking requirement—namely, whether a participant has made an affirmative election—before a plan administrator can rely on the Deemed Roth Election.
Client Relationship Consultant
Retirement Plan Compliance Analyst
Maternity Leave & Last Day Contribution Requirement
I'm 99% sure I know the answer, but I wanted to be 100% sure. If a participant is on maternity leave at the end of the year, are they still considered employed on the last day of the Plan Year in order to be eligible for a Profit Sharing contribution (the participant had worked over 1,000 hours prior to going out on leave)?
Thanks in advance!
Retirement Client Consultant
403(b) Deferral in New Jersey
Plan Sponsor adopting new 403(b) plan and has a New Jersey Employee. The Employee has discovered that 403(b) deferrals are not pre-tax in New Jersey (Pre-Tax Federal but not NJ taxes). What can be done for this employee?
Financial Services - Sales Executive
Financial Services - Sales Executive
Financial Services – Sales Executive
Missed Match - Included in Testing?
A participant had a Missed Deferral Opportunity in 2025. There were missed match contributions associated with the Missed Deferral Opportunity.
Should the Missed Match be included in Compliance Testing?
Thanks.
CDHP Consultant
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