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I came across this article from Verrill about implementing Roth Catch Ups when a plan has a provision to spillover deferrals to a NQDC once the 401(k) limits are reached.  The article in particular highlights a potential conflict between giving the participant an effective opportunity to elect out of a deemed Roth election and a requirement to make deferral elections before the start of the year for the NQDC.

https://www.verrill-law.com/blog/consider-nonqualified-plans-when-implementing-new-roth-catch-up-contribution-rules/

The article makes suggestions on steps to take now to be sure the operation and administration of plans with the spillover/link to a NQDC is reviewed before 2026 starts, and that everyone involved with the plan - plan administrator, plan sponsor, service providers, participants - are all informed.

This wasn't on my radar screen when discussing implementing Roth Catch Ups, so I am sharing it in case others also have plans that use these features.

We have a client that maintains 2 plans with us, one of which uses safe harbor match and the other that does not use a safe harbor contribution.  They became a control group 2  years ago and we have relied on the transition rule to avoid coverage but that is expiring.  What happens if the plans will not pass coverage to be able to be tested alone and technically need to be tested together? I know you are not able to aggregate plans for testing when one is safe harbor and one is not.  At this point, they do not want to change the plan design of either plan so we are trying to figure out how to fix this if coverage fails.

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Talking to a potential plan, and there are two f/t employees and 10 who are 'half-time'.  Assuming that these people really do work only half of a f/t schedule, do the rules really let us treat this as 2 + (10 x 50%) = 7 and therefore exempt from the mandatory automatic enrollment?  I realize that it might be safer to just include it for many reasons, but if the client is really against it... it's OK, right?  Thanks.

I just want to make sure I'm accurate in this.  A Plan has two participants, a husband & wife, both of which are deferring th maximum 401(k) contribution for the year:

Husband - $100,000 salary
Wife - $23,000 salary

Wouldn't the maximum deductible contribution be 25% of the total between them ($123,000 x 25%)?

I know the wife's full salary is being deducted as a 401(k) contribution, but couldn't we still use her salary and give the husband the total 25% of their combined salaries as a profit sharing contribution since her salary is still technically eligible income?

Thanks in advance!

What year do you file the 5500 for if the plan is an off calendar year plan. For some reason I wasn't able to read in the 5500 instructions on which year you'd file the 5500 for. Maybe I'm missing something? 

Client has sold the assets of their LLC, employees received their last paycheck 9/2/2025 and were obviously notified of the plan closing.

The business is not closing, and the new owners do not want the responsibility of the existing plan.

Can the plan termination date be 12/31/25 even though the employees were off payroll earlier?

In order to calculate the employer contribution, obviously a P&L is needed; I have not yet seen a P&L for less than a 12 month period.

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Hi

The sponsor terminated the DB plan in 2024 - not sure when the distributions happened - 2024 or 2025 - waiting for info, I did not do the termination and this will be a takeover.

The sponsor now decides that termination was a mistake and wants another DB plan.

As far as I know, there is no 1 year wait on this situation and can start the new plan in 2025 even if the final distributions happened in 2025 (they did unfortunately and account is closed, no luck there to rescind the termination).

Am I forgetting anything?

Thanks

Assume a participant severs from employment with a nonforfeitable account less than $7,000 (and more than $1,000) and the plan provides an involuntary distribution.

Despite that small size, the account includes both Roth and non-Roth subaccounts. (For example, elective deferrals were Roth and matching contributions were non-Roth.)

Assume the participant, after the proper notices, does not specify her preference for the distribution, invoking the plan’s default rollover.

Does a plan's administrator with its service provider pay separately the Roth and non-Roth amounts?

Or does a plan’s administrator and its service provider pay one sum, and instruct the default IRA provide on the distinct Roth and non-Roth amounts?

Does a default IRA provider separately account for the Roth and non-Roth amounts?

Does a default IRA provider put this in two IRAs? Or in one IRA with subaccounts?

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Unable to retrieve American Funds Funds Trust Reports have been unable to be produced due to "IT problems with restructuring the Trust Reports to the old platform" and these have not been able to be made available.

Since the beginning of October.  This will affect some clients who have been waiting for the Trust Reports as I  always compare these with clients' records.

I consider this a Reasonable Cause, but the communication with IRS usually takes a few months.

I have always been advised to wait until all information is available to file rather than just filing nebulously ax the client signs no perjury  as he signs Form 5500-SF.

Thoughts, comments?

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I'm not seeing anything specifically on this, so maybe that's my answer, but...

Company with 7 regular full-time employees and 5 full-time union employees.  Are they considered "normally employing" enough people to trigger mandatory automatic enrollment, or do we get to not count the union employees (presuming their retirement benefits are properly subject to their collective bargaining agreement)?  Thanks.