Bri

Could you argue that issuing the ACH directive to the RK, as part of the contribution submission, is an official move to segregate the assets as a determinable payable? Akin to handing them over a check that the RK lost behind a desk for X months..... I do think the DOL side, the participants got their money as of when they should have, seems clean. The IRS side (for the possible PT) seems more of the issue here.

Have the plan deposit the $35 in a checking account in the name of the plan and pay the guy from there, no fee. If the employer messes up 10 times, does the recordkeeper get to milk the guy's account ten times?

I think you let him take the whole thing to his rollover, but warn him up front that some of that amount is going to be deemed an ineligible rollover contribution and will be reflected as such on the separate 1099-Rs. If he wants to avoid the hassle he can wait, but it's his call.

then yes, while the 5500 is asking about the late employee 401k amounts, but your actual corrective measures for the match include earnings on top as well.

Does "er deferrals" mean the corresponding match?

Yes, it sucks not catching and fixing it by December 31 of the same year. The original PT was over two tax years. The new 1-1-25 PT only gets multiplied by the 15% once.

the W-2 is going to show the too-big deferral, but the 1099-R will show the corresponding addition back to the income. (And the code 8 is right, a 2026 distribution taxable in 2026.)

Wouldn't the IRS go after the sponsor for failure to deal with the forfeitures properly when they should have? Gotta think they'd want THAT for the other participants' sakes, like if they are instructed to reallocate.

The identical ownership is 45, and the 45% they are deemed to co-own is identical, the same 45% of the company.

Yeah, it's not 45 MORE percent that they own from each other....

Is this a question of whether or not a defaulted loan for someone at 60% vesting, would then leave all their other funds at exactly 60% vested still?

Does the 60 days matter? This would be correction of an ineligible rollover contribution, so he has until next tax deadline to get it out with earnings to avoid the 6%.

The -11g amendment would be however you spell it out. If you want him excluded from the SH source, have the amendment say that. You wouldn't be making him eligible for the 401(k) portion itself, right? Of course, now I'm wondering why not just give him the 3% safe harbor and a twenty-TWO percent profit sharing contribution?

Technically, percentages aren't shifted, amounts are. This really only matters practically when the populations in the ADP and ACP tests are different, like if the match requires last day and/or 1000 hours.

Double up next time and hope the next paycheck comes before the cure period expires?

I did mean that, they missed the DEPOSIT, not that they missed offering the DEFERRAL opportunity. Sorry about the confusion....

if they really made those 401(k) elections, you just treat this like any missed deferral like for a staff person. Figure out when it should have hit and calc your earnings from there.

Combos with testing, or just the DB/CB calculations themselves?

I've seen plan documents that say if the person's going to share in the allocation, they don't actually forfeit the nonvested portion yet....so maybe just spot-check your section there, too.

The failure is the test itself, not the timing for that one particular option you could use to correct it.

Does the plan provide for forceouts after NRA? That could eliminate future problems for the sponsor, at least. (Still hoping someone suggests a sack of nickels with a big $ on the front, left on the guy's doorstep every December.)

"No partial year interest" is great, until it's not. Which is when you have to explain to the sponsor why only the post-NRA guy gets extra gain on his prior year-end "balance." And why it's not at the plan's ICR of 4% but rather the AE of 5.5%.

Getting the match doesn't guarantee a full THM. (You're not mis-aligning this with the gateway rule, perhaps?)

Look at it as... Yes, they're subject to the THM every year. Now, do they have an exception they can apply? Wouldn't someone brand new be an otherwise excludable employee and therefore possibly excludable for THM purposes as well on those grounds?

W2 income triggers FICA in the Roth mandate rules, SE income doesn't. (Ha, this is where we all come up with contingencies like the IRS is gonna go after the CPA not assigning any reasonable wages for the S-corp. officer. But in a vacuum, no problem.)