AlbanyConsultant

I see. Those are good points. Thanks!

I'm definitely looking into the top paid group. I think the line will be north of $200K, but less than $500K. 2025 is literally the first plan year, so I don't have full data yet. What's the goal of your last question?

I have a large law firm client that recently asked about mega backdoor Roth and voluntary after-tax contributions in general. I explained the ACP test issue and after a slight pause, one of the partners said, "but that can be resolved by making a company contribution instead of refunds, right?" They are actually considering corrective QMACs to let their highly paid (and, coincidentally, HPI) participants do this. Sure, it works mathematically if they don't mind spending the money, but I have to wonder if it will really work out better than adjusting their class-based profit sharing.

We started a new plan for Company R in 2025, and we just found out that the plan's financial advisor (through a shell company he owns 100% of) purchased 10% of Company R's stock sometime in 2025. The plan is on a recordkeeping platform that pays the advisory form some amount of bp (50, I think). This seems to be a prohibited transaction; I don't see any way for the FA to keep getting paid on this. And he should return all the fees paid to him since the purchase (with earnings) to restore the plan. Anything else I'm missing? Thanks.

Sadly, telling a potential plan sponsor about how the safe harbor works during a sales meeting has no bearing on what they remember over a year later when you provide the contribution amounts.

Guess we got the official answer! I'm just not patient enough.

Are we all agreed that the rule is $145K of FICA wages to be a Highly Paid Individual (or High Earner or whatever your favorite acronym is) for 2026? I thought I heard something about it being increased for cost-of-living from 2024 to 2025 and that might make it $150K, but I don't see anything official on that. Thanks.

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.

Thankfully, this plan is not going to cover the union employees. So while I understand the possible issue with putting that on a union employee when it's not in their contract, that isn't my problem (at least, not today). I came to the same eventual conclusion - if nothing says I can't count them, then I have to count them, even if they're not eligible for the plan. I suppose it is similar to having a class exception (that meets 410b) - they are still employees even if you're not offering the plan to them. Thanks!

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.

That is something I literally never even considered. I will raise it to the UK company, but given that they intend to terminate the plan and pay everyone out in the next six months, I don't think that they are going to take this step.

Thanks, Peter. It was a stock purchase, so the UK company has all responsibilities. I know I don't know anywhere near enough law to know what that entails for the UK co to operate in the US. The UK people have been making all the decisions (for the plan and otherwise) since they made the purchase. At least functionally, they are as much in the know as any other US-based client. I am quite sure that all of my clients fully review the 5500s that I prepare for them and scrutinize every response to ensure that they are knowledgeable enough to sign the 5500. Yep, that's what I'm going with. LOL

US company was purchased by a UK company and we're winding the plan down. The US people are all gone - at least anyone in any management capacity. Can the person who is handling the plan at the UK company sign as Plan Administrator (and/or Plan Sponsor), or does that have to be a US citizen? All I can find is that it has to be signed under threat of perjury, which makes me think that the signer must be subject to US law... Thanks.

I have a very similar situation (though less fowl-based)... but the HCE owners do intend to participate. They also, unurprisingly, don't want to cover the visa employees. I suppose they're out of cluck?

Thanks!