AlbanyConsultant

I agree with @justanotheradmin - for any 2025 allocations, you should only be using forfeitures in the account as of 12/31/25 (presuming that's the end of the plan year). That being said... especially in plans with forfeitures happening all the time, good luck telling your plan sponsor to only use $X when the recordkeepers make it so easy to use whatever is sitting there. And I've had auditors who let that go on the theory that as long as it's being used, that's OK. So in general I wouldn't stress over it. But in this case, since this is the only non-key, I'd really want to play it 'by the book'. Dear plan sponsor, you have to deposit some money but the good news is that (a) some of it will be forfeited and (b) you'll get to use all that sweet, sweet forfeiture in about seven months.

Very bold to assume I'm only married to one person... ! 😁

@Paul I I'm not sure I can distinguish exactly who is the problem... does it matter? I sent them a report that says in part, "dear Partner 1 and Partner 2, make sure to deposit your pre-tax 401k deferrals per your elections". Partner 1 responded "will do". "The partnership" made the deposit of all the employer contributions (including for the partners), didn't send any funds for the partners' deferrals, and then filed their tax returns (taking deductions for the deferrals that were not deposited). I don't see where any additional impact on the partners would be, other than lost earnings paid by the partnership.

Sound points as always, @Peter Gulia. There are other participants - in fact, this is in a MEP. One of the participating employers messed it up (this PE does have other non-partner participants as well). So the MEP sponsor is keen to do this as 'by the book' as possible.

To clarify, they took the deduction on their return. So treating it like a late deferral deposit (instead of a missed deferral) sounds reasonable.

@Bri, that sounds more like correcting it as a late deferral deposit.

I know I've seen this discussed before, but I'm not finding it... 401k plan with SHNEC and profit sharing. The partners have their valid deferral elections in place by 12/31/25 to both do the max. We sent a contribution report telling them to deposit the SHNEC and PS and also the deferrals for the partners before the due date of the tax return... and they forgot to do the deferral part. 2025 taxes are filed. What recourse is there for the partners at this point? I thought I remembered that it was treated like a missed deferral opportunity for them? Appreciate anyone pointing me to where this is covered. Thanks!

D, the 100% owner of an S-corp, passed away in 2018. Ownership of the business passed to D's two sons who worked there (and were already participants) 50/50, and they also happened to be his 50/50 beneficiaries. D was in RMD payment status, so we've been continuing to calculate his RMD each year and splitting it between the two sons. Since D passed away pre-SECURE, are there any timing issues I need to worry about for the distribution of D's entire balance? The post-PPA plan document says that the beneficiaries "may" elect the 5-year rule. Thanks.

I would hold to see the W-2. I figure that since I already have evidence that it was NOT on W-2, I can't take it unless I now see that something has changed. I wouldn't immediately resign; I'd complete the work based on what I could support. If they want to fire me over that, so be it. If they ignore my calculations and do something different, then I'd probably have to resign. I'm pretty sure that I would apply this consistently regardless of the client... but you know what they say about good plans surviving first contact.

If it was my plan from the jump, totally. But this is showing up at my door with this problem. I had intended on amending this provision out (and I still probably will), but this employee is kinda adamant.

Had three clients get these this week. All on plans fully on recordkeeping products that have never filed a 945 for plan purposes. Which makes me wonder if those plan sponsors have previously filed a 945 for some other non-plan related reason... It's always been our experience that whomever is doing the 1099-R should be doing the 945 as well. When we did 1099-Rs for non-product plans (remembering those days un-fondly), we prepared the 945s.

To answer some of the above questions... Yes, the plan allows for a one-time irrevocable election to opt out of the plan entirely. I'm referring here to "opting out" of the safe harbor nonelective and profit sharing allocations. "Opting out" of deferrals is trivial. I always forget this. I'll have to see if this works. Thanks!

Taking over a plan with an owner and two NHCEs. As NHCE#2 is becoming eligible, she says she wants to opt out of the plan entirely. But... then it fails 410b, and the correction is to give her allocations. I've explained this to the financial advisor, the plan sponsor, and the participant. She is adamant she wants nothing to do with the plan "and I've checked with the DOL and I am aware of my options." Sigh. I've had similar situations where someone wants to opt out entirely due to religious reasons... but fortunately, it's never caused a 410b failure. And she is not answering if her objection is along those lines - not that I'm sure that helps. What can we do? Thanks.

Some selected sections of the basic plan document... I bolded the part that I think makes this work.

I'm waiting for the day that casinos convince the government that allowing participants to "invest" in a spin on the roulette wheel is a prudent investment.