A participating employer has chosen withdraw from participation of the PEP and terminate their plan.  The employees with cease contribution and their assets will be moved to their own SEP plan.  The SEP plan will be terminating immediately.  

Question:  How is final testing completed?  From the PEP or from the SEP?  Short Plan year?  

Any thoughts would be appreciated.

A participant deferred too much in 2026 and exceeded the 402(g) limit.

We calculated the earnings on the excess and will distribute the excess plus/minus earnings.

Which code should be used for this distribution? Should it be code 8?

How will this affect their taxes for 2026? Since the participant will be limited by the 402(g) limit on the tax return, would he be double taxed if he also reports the excess distribution (using code 8)?

Thanks!

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A participant is still actively employed but the recordkeeper shows a termination date from approximately two years ago. The participant says the date corresponds to moving from part-time to full-time, not an actual termination.

The plan’s call-center instructions direct the participant to his manager rather than the plan. The manager does not know how to correct the record. The recordkeeper’s service team says the plan must submit a new file before the participant can establish deferrals.

For those familiar with payroll/recordkeeper administration:

1. What record would typically correct this—a rehire transaction, employment-status correction, or full eligibility-file update?
2. Which sponsor-side function usually owns it: payroll, HRIS, benefits, or the TPA?
3. Is this normally corrected through the next regular feed or through an ad hoc correction file?
4. Are there controls that identify active employees coded as terminated, or are these usually found only when the employee tries to enroll?
5. What is the normal escalation path when the employee’s manager cannot identify the appropriate benefits or payroll contact?

I am trying to better understand the upstream administrative process because my role generally sees only the participant-facing result.

The situation:

• 401(k) plan participant executes an ambiguous beneficiary designation.  Account balance is $100,000
• Participant has two surviving brothers.  The beneficiary designation is unclear as to whether one brother receives all $100,000 or whether each brother receives $50,000.
• Employer asks:
  • What is the risk to the plan/employer if a distribution is made? (Obvious to me -- Potential litigation)
  • Does either brother have a right at this point to request and review/examine the beneficiary designation?
  • Can the employer refuse to provide the beneficiary designation to the brother(s) until requested during discovery (if there is litigation)?

Highly self-sufficient employer (i.e., reluctant to hire outside counsel) wants to know its options at this point.

• Make a distribution to one brother and hope everything works out?
• Make a distribution to both brothers equally and hope everything works out?
• Is there anything the employer can do to decrease the risk of one or both brothers initiating litigation?
  • Provide the brothers with the beneficiary designation form, ask if they're OK with splitting 50/50, and have both brothers execute an indemnification/settlement agreement before making the distributions?
  • Can the employer somehow use the ERISA claims procedures to its advantage here?
  • File an interpleader action with the court?

Is there anything else the employer should be thinking/doing to resolve this matter in the least expensive way possible?

Thanks for your thoughts.

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Recordkeeper for ERISA covered 403b plan of tax exempt entity offering "automated" RMD processing including participant communication and automatic payout of RMD if no action taken by participant by certain date.  Recordkeeper also advising that plan can "waive" spousal consent for RMDs.  I have been unable to find any authority for this.  Anyone else have experience with this?

As an ERPA, I am representing a client with a SHNE 401(k), no PS.

The auditor is looking for a SHNE 30 day notice.

I believe the notice is no longer needed, the audit is for 2023.

Does anyone have a cite for this?

Suppose you have a profit sharing plan that covers 15 participants and has for over 10 years.

They would like to add a 401(k) provision 8/1/2026 and make the plan Safe Harbor NEC for 2026.

I would think that since the profit sharing plan has been active since before 1/1/2026, the overall 415 limit for the 401(k) profit sharing plan would be $72,000 for 2026. 

Question: all participants will be under age 50. Since all participants will only be able to start funding salary deferrals on 8/1/2026, must the salary deferral limit be limited to 5/12ths of $24,500 or $10,208? Or could they fund the entire $24,500? And I would think salary deferrals, the 3% SNEC and Profit Sharing contributions to the participant would be based on full year compensation and subject to the overall $72,000 415 limit.

Does anyone see this differently?

Thanks.

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