austin3515

For this one, I actually think the IRS is correct. The COLA section does not reference an increase for these. The COLA section calls for increases in B(i) (regular catch-ups) B(ii) (SIMPLE Catch-ups), and Paragraph (E) (Super Catch-ups, which is why I think the IRS is wrong). But there is no COLA provided for B(iii) which is the elevated SIMPLE IRA catch-up limit., That one is hardcoded to 110% of the 2024 limit. No COLA increase. Obviously a technical correction would be needed on that. Really puzzled on why they thought there was no COLA for the super-catch-up though.

This is odd. The same scenario applies to the enhanced limits for the catch-up contriubtions on SIMPLE IRA's with fewer than 25 people. They left it at $3,850 for those plans even though they increased it to $4,000 for plans that are not under 25 people. That's ludicrous. I can't believe this is not going to be addressed 😱

I sure this doesn't end up being a scenario where we all send out our updates and they change their minds. I forget what happened a few years ago with a change in the SSTWB that was a mess. It's unlikely that Mercer and Milliman are not reading this correctly.

1.401(m)-2(d)(4) appears to be the linchpin on this. IT's the one that say the ratio of an HCE's match to their deferrals cannot be greater than that of any NHCE. Not sure what you all think but I don;t see anything that explicitly says that requirement cannot be performed on a consolidated basis between both matches. One requirement is that you have to satisfy one of the SH contributions--this plan does. A fixed match cannot be based on deferrals in excess of 6% of pay. This plan presumably will not do that. The last relevant requirement is that the match rate for HCE's can't be greater than NHCE's. When combined, the NHCE's will be greater (because the HCE's will be excluded from the SH Match). The reg does not say "excluding the Safe Harbor Match." I would never do this without submitting an ask the Author question of ERISApedia, but I am definitely curious if you all see something in the reg that would cause a problem. (4) Limitation on rate of match. A plan meets the requirements of this section only if the ratio of matching contributions on behalf of an HCE to that HCE's elective deferrals or employee contributions (or the sum of elective deferrals and employee contributions) for that plan year is no greater than the ratio of matching contributions to elective deferrals or employee contributions (or the sum of elective deferrals and employee contributions) that would apply with respect to any NHCE for whom the elective deferrals or employee contributions (or the sum of elective deferrals and employee contributions) are the same percentage of safe harbor compensation.

They must have read my post 🤣🤣🤣

All that being said, is the arrangement I described not roughly analogous what many others are doing? I can't imagine Morgan Stanley invented this approach?

Let's boil it down to a simple example. All of the employees at my company (for example) are eligible for a $5,000 bonus every year if we hit our goals. We only get that bonus for 2025 if we are here through 12/31/2028. It is then paid out 1/31/2029. The same thing applies every year (rolling). There is nothing wrong with this because it is not a deferred compensation plan, correct? No compensation is ever being deferred because as soon as the substantial risk of forfeiture lapses, it is paid out (within 30 days which counts as a short-term deferral. Is my understanding correct?

https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2025-03a Do people agree that if a plan is designed as a top-hat plan specifically, the concerns outlined here are not applicable? The Morgan Stanley plan does not sound like a plan exclusively for HCEs and management. Sounds like a plan offered widely to all advisors. I assume that is the issue. And I further assume that because the benefits are paid when vested there is no deferral of income anyway which eliminates concerns about "funding." Do I have this about right?

Sure would be nice what the issue is with profit sharing. You have said the plan does not include a profit sharing provision. I suppose there could be $2MM of profit sharing from past provisions on a 6 year graded schedule. If that is the case then I get that. But if you're goal is just to keep it simple, everyone in their own group is a lot simpler than the language I mentioned.

Well this is how I see it: (E) sets the beginning number alone. The beginning number alone is 150% of the 2024 catch-up limit. After 2024, the reference to 2024 is moot. Why? Because (C)(i) says the amount in paragraph (E) is adjusted for inflation. I actually don't where the other view would come from?

I don't think anyone mentioned the bold text below? 414(v)(2)(C). Doesn't that suggest COLA adjustments? (C) Cost-of-living adjustment (i) Certain large employers In the case of a year beginning after December 31, 2006, the Secretary shall adjust annually the $5,000 amount in subparagraph (B)(i) and the $2,500 amount in subparagraph (B)(ii) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2005, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500. In the case of a year beginning after December 31, 2025, the Secretary shall adjust annually the adjusted dollar amounts applicable under clauses (i) and (ii) of subparagraph (E) for increases in the cost-of-living at the same time and in the same manner as adjustments under the preceding sentence; except that the base period taken into account shall be the calendar quarter beginning July 1, 2024.

you could ask an ERISA attorney if an exclusion like this would work. You would uncheck the HCE exclusion box in the Safe Harbor section and instead say in the "Other" box: "The Employer shall determine each year, on a discretionary basis, which HCE's (if any) shall receive an allocation of Safe Harbor Nonelective Contributions. The Employer may further determine each year the amount of each HCE's allocation of Safe Harbor Nonelective Contributions, provided the allocation does not exceed 3% of Compensation for any HCE." This does not get you out of any top-heavy minimums mind you. There is no checkbox for the above which is why you would want to check with ERISA counsel. You might even submit it to Relius and see what they say. I think they'll give you a pretty good answer. There is nothing legally wrong with what I wrote as far as I know. Curious to hear what Belgarath would say!

I don’t see why you couldn’t do that but not sure how you do it without names. CFO and CEO might be the same as names anyway. Again the normal approach is profit sharing. Maybe the reluctance is vesting though.

If this a calendar 2025 plan year end it’s not too late to add the provision.

Just don't forget that counting hours generally means tracking LTPT which is no bueno. I caution clients in the starkest of terms away from dealing with those rules. They are absolutely impossible to comply with. I dont care who you are, what recordkeeper, etc. They are 100% infeasible. It's laughable they even wrote it into law.