30Rock

Look at base plan document because some have built in correction. Normally to apply 415 definition in order to not blow up the safe harbor. Otherwise, I think VCP is the most conservative option. I have heard 11(g) amendment cannot correct for a failed safe harbor plan.

I am not sure if you can true up for part of the year and then revert back to payroll. I think the IRS Notice says you switch to annual based match for the year if you want a retro increase.

Hello - just wanted some clarification on this issue. A current safe harbor plan provides for an enhanced safe harbor match of 4% and use a payroll computation period. Sponsor wants to increase it this year to 5%. What are the mid year requirements - 30 day notice, the increase must be retroactive to 1/1/26, can the plan do a true up match retro to 1/1 and then continue with the payroll match going forward, or does the match computation period have to change to annual for the remainder of the 2026 plan year? I appreciate your thoughts!

Looking for guidance. We have a spin off plan effective 4/1/26 with the EACA mandate. The prior RK drafted the EACA to use the first day of the following Plan Year as the date of the first increase. New RK can only use the initial period - 2nd plan year. My question is how to administer for the employees auto enrolled in 2026. Can the new intial period be applied for any of the 2026 auto enrolled participants? 4/1, or could it be retro to employees hired on or after 1/1/26 as long as they get an upddated advanced notice letting them know the first increase will not occur until 1/1/28? I know the conservative approach is to apply the change 1/1/27 in the plan document. Thanks for your help!

We have an asset sale and a SIMPLE IRA exists. As of the sale, the employees are technically terminated and then may transfer to the buyer. What are the options for the SIMPLE IRA assuming buyer does not want to set up a SH 401k plan - option 1 the SIMPLE IRA stays with the seller and essentially terminates since employees are terminating and there will be no payroll contributions, option 2 the buyer could take over the SIMPLE IRA during 2026? The problem with option 2 is that I do not see how the new buyer can amend the form 5305 or 5304 mid year - no room for a successor employer on the form. Is this a matter of a Board resolution or asking the IRA custodian to recommend the process? Thank you!

I think something like that would be needed. I recently found this prior discussion on this board.

Safe harbor plan fails compensation ratio test for the match since bonuses are excluded. The plan document does not provide any type of correction method such as use total compensation. Does an 11(g) amendment correct this situation where compensation would be added back? I remember hearing in the past that if a safe harbor plan fails compensation tests it blows the safe harbor, unless the base document has a correction like the AQSC document does. This plan uses a pre-approved document but no correction language has been located. How do we proceed? Thanks!

Safe harbor 401k plan has a prior inactive discretionary match. For 2026 they are removing the safe harbor match and reinstating the discretionary match. Can the plan document use prior year testing under the first plan year method in order to assume 3% for NHCE’s for purposes of the ACP test? I was thinking no since there has previously been a discretionary match and adding it back does create a first plan year. But as always I appreciate your feedback!

Yes I agree thanks!

The plan sponsor is trying to be more restrictive and does not like the service spanning of elapsed time. But I do not think passage of time will help, and in fact is more lenient if the period of severance exceeds 12 months. Example - If plan has 6 month eligibility, with passage of time, you still include the months he was gone. So even if he comes back within 12 months, all the time since hire date are counted? Hired on 11/6/25, work 2 months, quit on 1/6/26, rehired on 6/7/26. He is immediately eligible and you do span the time he was gone, but it is easier since you just look at the calendar and add 6 months to the date of hire and there is no computation needed as to whether there was a 12 month period of severance. Thoughts?

Great thank you!

Does anyone know what the following means in the PPD document - plan elects a 6 month eligibility (not consecutive and no hours required), elapsed time is not marked but actual hours is marked. The adoption agreement notes that this is passage of time and not elapsed time and no minimum hours of service is required. My question is do you still have to apply the 1000 hour in a 12 month period failsafe? How would any break in service provision work? Thanks!

If the error is found after the deadline and corrected and the notice is provided, is the QNEC 25% or 50% for terminated after SECURE 2.0?

It seems to me the IRS Fix It Guide is not picking up the changes in IRS Notice 2024-2 the Grab Bag. The Fix It Guide states the 50% QNEC applies to terminated employees even if the error is found within 9 1/2 months. I think that is the old rule. Thanks!

True - they could always subpoena the plan.