WCC

See RBG's comment in the below thread. I wasn't paying attention to that until RBG pointed it out.

The earnings should be paid to the ineligible participant. The sponsor can't benefit from making a mistake, investing the participant's money and keeping the earnings. I didn't look up a cite for that, so consider it just my opinion. edit: I also made an assumption that the $500 is an employee deferral. If that is not correct, and this is employer nonelective money, then my answer changes.

I agree with you. The separate election is just a cosmetic box used for "convenience". I am not a fan, but I know some sponsors have their reason why they think it is advantageous. I have seen this many times and those dollars should be matched. I have seen one or two documents written in a way that says "...we don't match contributions made under the separate catch-up election box". If your plan just says "we don't match catch-up", then those dollars should be matched.

possibly a second "pooled" account invested the same was as the pre-tax pool?

You have probably already thought about this, but I will ask... Is the participant catch-up eligible? Could that be the reason the payroll system allowed this individual to exceed the document limit of 10%?

It is not exempt since the CODA was effective after 12/31/2022. Must be an EACA. https://www.irs.gov/pub/irs-drop/n-24-02.pdf Q. A-1: When is a qualified CODA established for purposes of determining whether the qualified CODA is excepted under section 414A(c)(2)(A)(i) of the Code from the requirements related to automatic enrollment (that is, whether the qualified CODA is a pre-enactment qualified CODA)? A. A-1: For purposes of section 414A(c)(2)(A)(i), a qualified CODA is established on the date plan terms providing for the CODA are adopted initially. This is the case even if the plan terms providing for the CODA are effective after the adoption date. For example, if an employer adopted a plan that included a qualified CODA on October 3, 2022, with an effective date of January 1, 2023, then the qualified CODA would have been established on October 3, 2022 (that is, before December 29, 2022), even though the qualified CODA was not effective until after December 29, 2022.

I listened to a webinar today presented by a well-known industry expert. He made a comment about SECURE 2.0 Section 603 that surprised me. He made the comment that to simplify the administration of Roth catch-ups, a plan sponsor could amend the plan to only allow catch-ups in the form of Roth for everyone. I thought I must have misunderstood him because to me the proposed regs and final regs seem very clear that this is not allowed. However, when questioned, he commented that he believes the IRS will allow this and the third party document providers are preparing for this. Does he know something that no one else knows? Has anyone else heard rumors of the IRS taking this stance? Thanks

CuseFan - excellent memory!

A 401k plan is a designed based safe harbor for both ADP and ACP testing; however, the plan allows after-tax contributions. The plan includes the match with the after-tax contributions to satisfy the ACP test (passes ACP just fine). My question is, how should Schedule R question 21b be answered (or 5500 SF 14b)? The question references both deferrals and match, without after-tax, the design would satisfy ACP. Thanks 21b If this is a Code section 401(k) plan, check all boxes that apply to indicate how the plan is intended to satisfy the nondiscrimination requirements for employee deferrals and employer matching contributions (as applicable) under Code sections 401(k)(3) and 401(m)(2). _ Design-based safe harbor method _ “Prior year” ADP test _ “Current year” ADP test _ N/A

The ASPPA courses: Retirement Plan Fundamentals and Introduction to Retirement Plans are excellent. ERISApedia is also excellent, there are a lot of recorded webcasts on many different topics.

No. A match of 100% on the first 6% satisfies the ADP and ACP safe harbor (assuming no allocation conditions, vesting rules, notice requirements, etc. are satisfied). The 4% rule you reference comes into play when a discretionary match is funded in addition to a safe harbor formula. If there is a discretionary match in addition to a safe harbor match, then to satisfy ACP safe harbor, the match cannot take into account more than 6% of pay and the match contribution cannot exceed 4% of pay.

Not that I am aware of. I think I have spoken with what I would consider all the "big" recordkeepers and they are all asking for an indicator file. From my perspective most RK's want the information for targeted communication campaigns. Whether that is messaging specifically placed on the employee portal, emails or letters.

I would like to make one comment to this statement to confirm my understanding. I agree that the timing is irrelevant. However, I don't believe the Final Regulations change the nature of a catch-up. Meaning a catch-up is still an amount that exceeds a limit, but any Roth deposit may satisfy the requirement. For example, let's say a 401k plan document is written to not match catch-up contributions. In January 2026, a participant (age 55) funds $8,000 Roth and $0 pre-tax February - December the participant funds $24,500 pretax. $0 Roth The Roth dollars satisfy the rule, but they are not catch-up dollars. The final $8,000 pre-tax dollars are still the catch-up dollars and stay as pre-tax. Therefore if a plan uses a pay period match formula, the Roth dollars are matched, the final $8,000 of pre-tax is not. This may be semantics, but I would change the statement to say: The first Roth dollar deposited can be used to satisfy the Roth catch-up requirement.

Yes, for catch-up eligible participants with FICA wages in excess of $150,000

https://www.irs.gov/pub/irs-drop/n-25-67.pdf The Roth catch-up wage threshold for 2025, which under section 414(v)(7)(A) is used to determine whether an individual’s catch-up contributions to an applicable employer plan (other than a plan described in section 408(k) or (p)) for 2026 must be designated as Roth contributions, is increased from $145,000 to $150,000