Belgarath

I'm guessing that perhaps it is in an administrative procedures addendum, if your document has one? If it truly isn't addressed anywhere, I would just make sure they opt out again. No harm, no foul - even if it is hidden in the document so well that it is impossible to find, can't hurt to have them opt out again, even if isn't strictly necessary.

Interesting question. I'd say yes - there's an enforceable agreement to repay the loan, which is properly suspended as permitted under 1.72(p)-1, Q&A-9 - and it will be reamortized to remain withing the 5-year period. Although I haven't heard of anyone doing this, it seems valid to me.

Thanks Cuse. Interesting, because upon further digging, I found an unofficial opinion from a big name that opined that the regulation permits counting the fractional month as a whole month, for 415 purposes. This is one of those issues where I have a hard time getting worked up over it...but maybe I should.

First, pardon my typo on the fraction - I meant to say 6/12 or 6.226/12. When counting months on my fingers, I think I counted my extra thumbs twice...And thank you for the valid points you raised! In this particular case, all compensation ceased in April of 2025. So the 401(a)(17) limit wouldn't have to consider paid vs. accrued for the 1 week in July, right? But upon further reflection, I'm thinking that for a reasonable and consistent approach, perhaps it would actually be more correct to just use 7/12 for both 401(a)(17) and 415? It seems like there is some room for interpretation here? This one is messy for many reasons, not least because unbeknownst to us, the owner (but not employees) took a full distribution of his/her account, which included deferrals, match, and safe harbor, which they contributed for 2025 based on unreduced compensation which resulted in an excess allocation and 415 violation. Sheesh...

Suppose a calendar year plan terminates 7/7/2025. A question has arisen as to the proper 415(c) reduced limit. According to treasury regulation 1.415(j)-1(d)(3) (emphasis is mine) fractional parts of a month are included. So the proper fraction is 7/12, not 7.226/12, correct? (d) Change of limitation year - (1) In general. Once established, the limitation year may be changed only by amending the plan. Any change in the limitation year must be a change to a 12-month period commencing with any day within the current limitation year. For purposes of this section, the limitations of section 415 are to be applied in the normal manner to the new limitation year. (2) Application to short limitation period. Where there is a change of limitation year, the limitations of section 415 are to be separately applied to a limitation period which begins with the first day of the current limitation year and which ends on the day before the first day of the first limitation year for which the change is effective. In the case of a defined contribution plan, the dollar limitation with respect to this limitation period is determined by multiplying the applicable dollar limitation for the calendar year in which the limitation period ends by a fraction, the numerator of which is the number of months (including any fractional parts of a month) in the limitation period, and the denominator of which is 12. In the case of a defined benefit plan, no adjustment is made to the section 415(b) limitations to reflect a short limitation period. (3) Deemed change of limitation year. If a defined contribution plan is terminated effective as of a date other than the last day of the plan's limitation year, the plan is treated for purposes of this section as if the plan was amended to change its limitation year. Thus, the rules of this paragraph (d) apply to the terminating plan's final limitation year.

Use the form for the year in which the plan year begins.

Maybe things have changed, but I thought that an EZ isn't eligible for the DOL's program. Instead, you have to use the IRS program under Rev. Proc. (2015-32?) and it is a paper filing - can't file electronically. You might want to check on that.

I was going to do a new question post on this, until I saw yours. We've had mixed results - a couple of 8955-SSA forms filed earlier last week show a status of received, but they haven't been processed, whereas some others filed AFTER that have been processed. Anyone else finding such inconsistencies?

Anyone else having trouble accessing this page? Format has changed, and I can't get any forms when I enter a form number in the search box. Maybe just screwed up due to the shutdown?

YES!!!!!! Sadly, in my world, they rarely do.

I have to say, ignoring the possible deleterious effects on long-term fiscal or social policy, as a TPA, I LOVE self-certification.

The final regs allow this. Other than for possible administrative simplicity/consistency, is there any other good reason to do this? I can't think of one. Most of our clients (we are primarily smaller plan market) would prefer NOT to be forced into HPI status if not required to do so. Thoughts?

That's what we are doing...

We haven't done (nor will we) any formal quantitative analysis of this question. I CAN say that it is darned few, in general. An administrative PIA all out of proportion to the end results. Somewhat typical of many of the SECURE/2.0 changes...

Pre-approved plan document. Safe harbor nonelective. Eligibility is a checkbox which is for BOTH deferral and safe harbor. Per diem employees excluded. NHC per diem was allowed to defer. For correction, if it was under VCP, I'd comfortable at least ASKING to retroactively amend to allow the deferrals only, even though the IRS might reject it. But for self-correction, I don't see it as a valid choice - you are retroactively amending and waiving the exclusion, and therefore I think it has to be the full Monty. Any thoughts? Only one NHC, and not worth the cost to file VCP anyway.

Well, the contribution to the plan must come from the EMPLOYER. So as long as the individual can find an acceptable method to get these funds into the employer's coffers (check with their CPA) shouldn't be any problem.

Thanks Peter. I appreciate your technical points. But you are correct that I would not suggest/advise a client to ignore the proposed interpretation - that's for the legal/tax counsel to handle. For our mostly small clients, and the relatively few situations where this actually comes in to play, it is unlikely to justify the expense/risk to seek counsel. As a general rule, I favor discretion over valor when dealing with regulatory authorities.

Curious as to whether anyone with a "pipeline" or "contact" at the IRS has heard any rumors as to whether this foolish rule will be changed? It just isn't reasonable for someone who is a former LTPT and now a "regular" employee to receive a year of vesting credit for working 600 hours, whereas someone who started as a "regular" employee must work 1,000 hours to receive a year of vesting credit. Not to mention, of course, the administrative nightmare and client confusion...

Thanks Peter.

So, you have Plan A sponsored by Employer A. Employer B signs on as a participating employer, but not a CG/ASG and thus a MEP. Plan B winds down to one employee. Plan B is supposed to spin off, and then immediately terminate plan. Plan B employer never signs the paperwork to do this, and in the meantime, the one employee terminates employment, and the distribution is processed by plan A, where the assets were held. The question is, does the spinoff still need to happen, and a first and final 5500 form be filed for Plan B? There are no assets to spinoff, and the temptation is strong to just ignore it, but it feels all wrong. Anyone ever encountered such a situation?

Thank you both for your comments. The A Plan DOES exclude compensation prior to participation, so it simplifies this particular situation. The B Plan is going to be terminated, as far as I know, effective 12/31/25. There was originally some talk between the employers and their advisors abut merging the plans, but they decided against that.

This is a really silly situation, but potentially confusing. Corporation A purchases Corporation B during 2025. Corporation A sponsors a 401(k) plan that has true-ups. Corporation B's plan will be terminated, but effective December 1, the employees of corporation B will transfer to Corporation A. Corporation A credits service with Corporation B, so those employees will be eligible to defer in the Corporation A plan immediately. So, it seems that at least theoretically, there could be a true-up for these employees (fewer than 20) for the 1-month of salary deferrals in the Corporation A plan. Although the Corporation A plan calculates the match on an annual basis, they couldn't use compensation paid from another company while they were not a controlled group. Any disagreement with that? (As an aside - if they became a controlled group in, say, June, could/should the deferrals from that date be used in the calculation of a true-up in the Corporation A plan, even though those 2o employees were still employees of Corporation B?) Then we come to the ridiculousness. The Corporation A HR person is adamant that they don't want to make any true-ups for the former Corporation B employees. If we assume that the deferrals for these former Corporation B employees only start in December and are based only on salary/match in December, the potential true-up is negligible at best. Is there any way to avoid a true-up in this situation, if the calculations require it? It seems like an amendment prior to 1/1/26 could result in a cutback. I'm probably making this way more difficult than it is.

They won't lie, just "creatively describe." 😁

Similar to the 5500 preparer manual that Janice Wegesin used to do?

Thanks Paul. Day of the month, so the "person" is contending due date was May 10th, not May 31...