Lou S.

And remember as WCC notes it is FICA wages which are W-2 Box 3. Those could be different from Box 1 wages, 414(s) compensation, 415 compensation or eligible plan compensation.

Speculating but if you filed PBGC premiums and not a 5500 that might trigger a response from the PBGC but I don't know for sure. You could discuss with your client reaching out the PBGC directly with a copy of the e-mail asking the PBGC to verify the authenticity. If it is from the PBGC, and there are no missed MRCs you could let the PBGC know their information is incorrect. If there actually are missed MRCs, you could file the required Form 10(s). But if there are also still missing 5500s, the plan may have some additional issues to fix.

Since you said they are still working (and presumably now getting W-2 wages) and are not a 5% owner in their 1st RMD year, then they are not required to take a 2025 RMD unless they separate service before 12/31/2025. if I misunderstand the facts, that could change things.

Employee Locator — Best Of The Best Employment Screening! and PenChecks Trust - A Leading Provider of Comprehensive Retirement Plan Payment Processing Services – and more I found both easy and provided quick results. I have had various levels of success finding participants with the results, but you do get reports showing you complied with the DOL search rules for your files. I found APscreen a little more through in the reports they generated. There are quite a few others out there that all seem reasonably comparable on pricing. If you have a lot, you might look for a company that offers a bulk discount.

Thanks Artie. No, the situation has not come up in the past. The Plan Administrator agrees that whatever they do decide on in this particular case will be documented and used as a model should the situation arise in the future. FWIW the participant is not a highly compensated employee. For now, they are seeing if the vendor can handle this situation and will adjust its administrative policies accordingly to reflect the decision.

Thank you for all the comments. They are very helpful. I'm going to get some clarification but my understanding is the participant is on medical leave due to surgery and needs funds for medical expenses and is expected back in at work in 60 to 90 days. But it is a construction job and who knows if he will really be cleared by then or not. The plan does not allow hardships or that would be the likely route.

Yeah it's an unusual fact pattern for sure. My only question is does this meet the definition of eligible loan based o DOL rules at the time of issue knowing the payments will be suspended before they begin? My initial reaction is the same as yous Belgarath, that it is allowable but it is something I have never run across before.

Plan allows for loans. Loan program allows for payments to be suspended while on medical leave. Plan does not allow for hardship. Participant is not old enough for in-service. Participant goes out on approved medical leave. Participant now wants to take a loan to cover his medical bills, sponsor wants to allow. Participant and Sponsor then want to immediately suspend loan payments (that is no loan payments will be made initially) until participant returns from medial leave, not to exceed 1 year. Loan would accrue interest and be re-amortized so as not to exceed 5 year period when participant returns. Is this allowable from a code standpoint?

VAT would create a basis in the Plan. I'd ask for the 1099-R showing the non-taxable basis. I believe it would have been reported on Box 5. The distributions coming out are generally required to be pro-rated between basis and earnings.

If they benefit, you include.

Is there a separation of service? If they are on a leave of absence I would say no. if they are are on a lay off, I would probably say yes. Are they eligible for unemployment benefits while laid off? I don't know if that is definitive but I would lean toward that being a yes there is a separation and unless the plan has some other terms that would make the participant ineligible for distribution then they would be able to take a distribution. Have the Plan Sponsor make a determination whether the employee is terminated. If they treat as terminated and rehired, I wouldn't have a problem with the participant being eligible.

Assuming the plan allows, the projected limits for 2026 are what we think they will be, and the Plan has sufficient records to support, that looks correct. Your $39,500 total looks accurate. but your formula lists 402(g) and $24,000 not $24,500. I don't typically deal with 403(b) but I believe there are some ordering rules you have to follow when there are both catch-ups offered so assuming this hasn't come into play in a prior year I would agree but you do have some tracking going forward to make sure you don't mess up the lifetime limit on the second catch-up. At least as I understand it.

My guess is that there will be some mechanism to fix this, such as a required in-plan conversion of the excess plus earning being converted to ROTH after the fact or a refund like is currently done with a failed test with the Plan issuing a 1099-R, either as an IRS policy or an EPCRS self-correction. But I don't write the rules so this isn't legal advice. Just what appears to be a likely fix for a problem that as you say won't come up often but does need a solution once someone like ASPPA brings it up to someone in congress.

I guess it depends on whether or not they want contributions for the 2026 year. If they do and you terminate without a 12 month plan year for 2026 you'll lose safe harbor status have ADP/ACP testing and still have TH minimums to worry about for the non-keys so just be mindful of timing. At least that's my understanding. Unless they meet one of the exceptions for terminating a safe harbor plan mid year and retaining SH status. Of course with the partnership you could make the termination date 12/31/2026 and just start paying out employees after the common law employees are let go then still be a SH for 2026. If they don't want 2026 contributions, terminated 12/31/2025 and just wrap up everything in 2026.

https://www.bls.gov/bls/092025-cpi-reschedule-notice.htm BLS will issue CPI numbers for September on this Friday so SSA can meet statutory deadlines. Wonder if the IRS will issue next year's pension limits "soon after" or if the furlough will further delay that as well.

I believe that falls under the timely mailing is timely filed rule unless there an exception to that for minimum funding. But save the evidence that it was timely transmitted in the event of IRS audit. § 7502 - Timely mailing treated as timely filing and paying

Only the IRS can determine if it's reasonable cause or not. DFVC offers certainty, reasonable cause you are the mercy of whoever at the IRS is reviewing it, though you could appeal if it's denied.

I'm not sure what you are doing, but you might want to talk to your pension software provider and it looks like you have an extra comma in the wrong spot on Comp/Excess comp fields that's somewhat confusing. And if it's standard integration formula, I already answered how to allocate above but you should confirm with your plan document. The rules for permitted disparity are in IRC §1.401(l) and the regulations there under. I do not believe the method you are proposing will be in compliance with the terms of your plan document, but you can run it by you document provider and see what they say.

Is there published IRS guidance that says that? I'm not aware of one but if it exists I'd like to see it. It can't be applied for minimum funding because it past the deadline, but I see no reason why the tax payer can't apply it on their tax return if it is timely made for tax deduction purposes and designated as such by the Sponsor.

If it's a "maybe 3%" or you have any match, then my understanding is you still need the notice. If you have a hard 3% and no match, then the notice is not required. That's my understanding but if that's wrong I'd love to know what the correct answer is. I'm not sure what "interacts with the profit sharing" means in this ChatGPT context. As that's not a term I've seen in safe harbor before.

That is my understanding. Assuming it's below the maximum deductible and the sponsor designates it a 2024 contribution. You would be showing it on the 2024 tax return for deduction and on the 2025 schedule SB for minimum funding. I believe it also creates different asset bases for 404/430 when doing your 2025 valuation for min/max calcs.

Is the plan formula integrated with SS or is it a new comp design something like where everyone is in their own group where you are dong the 401(a)(4) testing with permitted disparity. Because if its the former it's pretty straight forward where every one gets 1 percentage on the base salary plus an additional percentage on the excess salary. So in your case it's possible everyone should be getting 12.93% base plus 5.7% excess and you look to the doc on 415 for the two owners who will go over the 415 limit and see what your document says in that situation. It may be refund of elective or it may be limit employer contribution. If it's the later, you should be able to run the calcs through your software and see what you need to pass. But as they say, when in doubt, read the document.

SECURE and SECURE 2.0 may have changed some of the analysis, especially with respect to T-H minimum of otherwise excludable so I'm not sure this 4 year old thread is the best place for your question. But this may get you in the right direction https://www.asppa-net.org/news/2017/11/otherwise-excludable-employees-and-entry-dates/ It gives the IRS reasoning with code sites on otherwise excludable but it is almost 10 years old and I don't know if it has been superceded by additional guidance depending on what your specific question is.

We have always taken the position that if at any time during the plan year the plan covered common law employees we would file Form 5500 or SF. We only file 5500-EZ if it covered only EZ eligible employees for the entire year. That has been our interpretation and is not legal advice to anyone. As for filing of the Form 5500-EZ under $250K that would be a client decision but be ready for an IRS letter and explanation if you've been filing Form 5500-SF and suddenly have no filings in the next year.

https://www.asppa-net.org/news/2024/9/plan-amendment-deadlines-extended-but-still-obligatory/ Per ASPPA - 12/31/2026