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I'm curious:

Plan reports on an accrued basis for contributions deposited after eoy.

For delinquent contributions that are discovered at a later date in the following year and deposited prior to completion of Form 5500 for relevant year, I believe those contributions are accrued in as well.

Howabout the related lost earnings?  This is for 5500 reporting.

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Hello!

Participant was hired on 6/30/25. Company pays bi-weekly and the first payroll in the system was 7/18/25 and for just 80 hours. As of the end of the year, this employee only showed with 960 hours in the system because the final payroll that included 12/22/25 - 12/31/25 was issued on 1/2/26 and applied itself to the 2026 hours.

Client is requesting to move the 80 hours from the 1/2/26 payroll and apply them to 2025.

Is there any rule that dictates if the hours are required to be applied in one year versus the other? While I think the hours should count for 2025 since that is when they were worked, my biggest issue with this is that the compensation earned on the 1/2/26 check counts toward 2026 and I feel like that should line up - But based on hire date and working full-time, I also feel this employee should get the vesting credit as does the client.

My only other thought is asking them what happened for the 7/4/25 payroll and why the EE didn't get 40 hours for the half-week they "worked".

Thoughts?

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Looking for guidance on a specific situation. We are a small employer with a SIMPLE IRA plan. Due to a payroll data entry error on our end, the wrong employee elective deferral amount was entered in our payroll system (Gusto) for one employee over 3 pay periods within the same quarter. The excess is well under the annual IRS contribution limit.

We contacted our CPA who also serves as our SIMPLE IRA custodian. They reached out to their back-end clearing firm (Apex Clearing) who is saying the funds cannot be removed and there is no corrective process available through their platform.

Our CPA advised against an early withdrawal with the employer absorbing the 10% penalty. The current proposed solution is issuing the employee a reimbursement check for the full amount, with the equivalent amount remaining in the SIMPLE IRA. The CPA is treating this essentially as a loan — the employee receives the check now and the equivalent amount is recouped via their ongoing $79 biweekly paycheck deduction going forward, rather than that amount going to their SIMPLE IRA contributions.

My questions:

Is there an IRS correction process (EPCRS/SCP) that applies specifically to excess employee elective deferrals caused by employer data entry error?

Is Apex Clearing's position that funds cannot be removed accurate?

Is the reimbursement check/loan structure compliant and is there a cleaner solution?

Thank you in advance.

401(k) safe harbor match plan excludes bonuses, so 414(s) compensation ratio test is run. Plan excludes pre-entry compensation. Test was run with pre-entry compensation excluded from only the numerator, not the denominator. Adding back the pre-entry comp to the numerator "fixes" the failed comp ratio test, but not adding back the bonuses. My understanding was that the period of compensation should be the same for the numerator and the denominator when calculating the ratios, meaning, pre-entry compensation was excluded from both. My asppa materials below seems to agree with that, but I can't find any code or regulation to cite. What are your thoughts? I feel that doing a retroactive amendment to "Add back" pre-entry compensation would be 1. not a valid corrective amendment since you're not correcting a true failure, you're correcting, I believe, the perceived failed testing, but actually just using incorrect testing methodology. And 2. not a valid discretionary amendment since we're talking the prior year and this would increase match benefits as well, presumably. 

ASPPA study guide materials:

Employee Who is an Eligible Participant for Only Part of Year
The nondiscrimination testing rules permit the compensation of an employee to be measured for just that part of the
plan year that he or she is an eligible employee. Presumably, then, to demonstrate whether a modified definition of
compensation satisfies IRC §414(s), the compensation ratio of an employee described in this paragraph may be determined
by dividing modified compensation for the portion of the year that the employee is eligible by the total compensation
for the same portion of the year.

EXAMPLE 4-15. Midyear Entry Date. An employee becomes eligible for a plan on July 1. The plan
year ends December 31. Therefore, the employee is eligible for only the last six months of the plan
year in which the employee first becomes eligible. The plan excludes bonuses from the definition of
compensation. The employee’s compensation ratio may be determined as compensation (excluding
bonuses) for the period July 1 through December 31, divided by total compensation for the employee
for the same period. The employee’s total compensation would include any bonuses paid during the
six-month period in which the employee was eligible for the plan year. If a bonus was paid in June, it
would not be included in the employee’s total compensation reflected, neither in the numerator nor
in the denominator of the employee’s compensation ratio.

I would appreciate help from the TPA compliance experts here! If a 401k ERISA plan is drafted to have a 12 month elapsed time eligibilitity for matching contributions for full time employees and a One Year of Service under the hours method for match for part time employees, does this invoke 410(b) coverage testing? Thank you!

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Traditionally, private equity firms have taken the position that they do not operate a "trade or business" and as such, Code Section 414's controlled group rules do not apply to their portfolio companies.

There have been, however, a few recent court decisions, most notably the Sun Capital case, that have held that a private equity firm that has the requisite ownership and control over its portfolio companies, can be held responsible for withdrawal liability if a portfolio company leaves a multiemployer plan because the PE firm is in the same controlled group as the portfolio company.

My question is whether a court (or regulator) can use this rationale in other contexts, specifically whether the portfolio companies need to be aggregated for purposes of determining whether the entity is an applicable large employer under the employer shared responsibility provisions of the ACA.

For instance, a PE firm establishes a fund that has two portfolio companies, one with 30 employees and one with 45.  If the PE exercise the requisite ownership and control, do the entities need to aggregate because they are within the same control group under Code Section 414?

I have not seen any discussion of this anywhere and I welcome any thoughts.  This also has application to other retirement and welfare plan scenarios.  

Thanks!

Can a tax-exempt organization whose executive director is the only employee establish a 457(b) or a 457(f) plan for this individual?

I'm not sure it satisfies the "top-hat" requirements since effectively 100% of the organization's workforce will be participating. 

Have any plan administrators started to distribute model amendments?  Curious to see how they are structured.

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A contributing employer enrolls a new employee into a multiemployer money purchase and health & welfare funds. Assumne further that we are referring to two individuals: one of whom is an undocumented alien and one who is an American citizen. After contributions have been made by the employer and allocated to or for the benefit of the employee, it is discovered that the individual supplied a false Social Security number. Frpm the perspective of the two funds, what should be done in this instance regarding the following: (a) the amounts that have already been contributed; and (b) the payment to the fund of future contributions? At the outset, it is important to note that the contributing employer, and not the fund, is responsible for complying with the I-9 requirement.

In my view, for (a) and (b), an employee's citizenship or immigration status should not matter for purposes of answering this question. With respect to the amounts already contributed to the qualified plan, unless the plan document has been amended to take advantage of therecovery of overpayments, in accordance with Section 414(aa) of the Code, nothing can be done to theamount already allocated to the employee's account because it would run afoul of tIn my view, with respect to the amounts already contributed to the qualified plan, nothing can be done to theamount already allocated to the employee's account because it would run afoufloyhe antialienation requirement. If the employee terminates employment, the account could be forfeited subject to thevesting schedule and the timing of the distribution would be dependent upon whether the account is less than the cash-out threshold. For the health and welfare fund, there are no individual account balances and no accrued benefits under a welfare plan and contributions to the fund would be pooled, similar to a defined benefit plan. Unless the plan or trust includes a provision protecting amounts contributed by the employer on behalf of its employees, an argument can be made that the amount could be applied to satisfy administrative expenses under the fund or as acredit to future contributing employer contributions. If the individual's right to benefits is otherwise protected by the fund's plan and/or trust, and the individual incurs a claim for the period to which the contributions apply, then the individual could obtain coverage and/or obtain reimbursement of a medical or dental claim incurred during that period.re

With respect to future contributions, for both the money purchase fund and the health and welfare fund, the contributing employer should be notified that no future contributions on behalf of the individual will be accepted by the funds. My reasoning is that the funds were not aware of the validity of the Social Security number issue when the previous contributions were made. However, once the funds became aware of these facts, continuing to accept such contributions could make the funds complicit in the fraud.

Now forthe real heart of my question: considering the implications of ejecting the "employee" from the plans and their impact upon the plan's qualification and eligibility for income tax exclusions, does anyone have any suggestions or other thoughts concerning the adoption of an amendment containing pro-active language which would (i) enable the funds to revoke contributions allocated (or benefits accued in the case of a defined benefit plan) prior to the fund's discovery that the employee supplied a false Social Security number, (ii) if (i) is not permissible, prevent the allocation of future contributions to the employee's account, (iii) to the extent amounts previosly contributed to the fund on behalf of the employee cannot be revoked, to prevent vesting of such contributions; or (iv) to provide a blanket exclusion of such employees from participation in the plan without causing havoc or negative results for coverage testing? In a sense, this is something that plans should be able to do since Social Security numbers are integral to proper tax withholding and reporting from both a payrolll and plan administration perspective.

Thanks in advance!

We have a plan with about 1000 active employees. About 300 were moved to a leasing corporation in 2025. The plan excludes leased employees. Would this be considered a partial plan termination?