Lou S.

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

Assuming John and Joe don't have ownership in ABC that might change this, it does not appear to be a controlled group between A and B under §414(b). The ABC company does not own at least 80% of Company A for a parent-subsidiary group to exist. Though it would for 415 limits, since the at least 80 is replaced by more than 50/ So if A & B have separate plans you still have 415 aggregation but no other aggregation. ABC would be a parent-sub of B, but not A.

https://www.irs.gov/pub/irs-drop/rr-25-15.pdf The IRS issue guidance on uncashed checks in Revenue Ruling 25-2015 that may be helpful to you. You can ask the actuary about question 11, but my understanding is that question would be answered as "no" and you would not attach a Schedule SB for the year following the termination where only payouts are being made.

I assume they were under $1,000 cash outs or they would have been rolled to IRA in the first place. I probably would not have put the money back in the plan but since 1099-Rs were issued are you now creating an after TAX basis in the plan for these participants? What happened with the tax withholding? If you have a trust for 2025, presumably you have a filing requirement for 2025 and 2024 would not be your final return. If it's terminated in a prior year, it's not subject to the minimum funding rules and no SB would would be required. And chance you can show it as a payable on the 2024 return and open savings accounts for them based on the 2024 1099-Rs or issue them cashiers check assuming you have good address you can send by registered mail?

So too much ROTH was deposited to his account? If so remove the excess, use it to reduce the next company 401(k) deposit and you are done at least from the plan stand point. You will need to correct the payroll so their year-end W-2 is correct. As for how you retrieve the over payment from the employee, I'll leave that to other folks to address.

It would seem based on your clarifications that the Plan Sponsor's options are - 1 - fix it's payroll to deal with the law change. 2-elimated catch-up altogether by plan amendment. 3-deal with fixing any errors after the fact.

That box is checked if you adopt after year end. For the extended deadline... Presumably the plan sponsor tax return is on extension or you couldn't do it anyway and you rely on that for automatic approval of extension assuming plan year and tax year are the same but that extended deadline might be 9/15 or 10/15 depending on entity type of the sponsor. Have you checked the instructions for Form 5500? it may be in there, I'm not sure.

That would be odd to say the least but I suppose you could put any dates you want on them though I'm not sure how they would both be correct with different dates. The 5500 is filed through the DOL EFAST system, the 8955 through the IRS FIRE system. Whether or not the two systems talk to each other, I don't really know. I assume you are asking because of the 7 month deadline? I'd say the correct answer is you probably shouldn't but the audit risk seems quite small when you are likely reporting a bunch of final year Ds to remove from the rolls.

Great ask the advisor for an IRS citation or letter stating he will pay any IRS penalties if the IRS takes a position different from his.

No If they deferred $27K and the limit was $23K, $4K recharaterized as catch-up and not in the ADP test, $23K is in the ADP test. If they fail the ADP, up to an additional $3,500 will be recharetreized as cacth-up reducing the refund they otherwise would receive and be retained by the plan because they had not used their full catch-up. If they need a refund larger than the recharaterization amount, they will need refunds. Unless you are over an applicable limit, plan or statutory, the amount goes in the test.