CuseFan

I have seen, and had clients in the past, that filed an extension, filed their return after the original due date and before the extended due date, claimed a deduction for their retirement plan contribution, and then used their tax refund toward their contribution deposit which was made by the extended tax return due date.

Great points Ilene. As with many questions that come through here - just because something CAN be done doesn't mean it SHOULD be done. For those with religious objections, maybe the employer suggests they donate any future distributions to charity and name as beneficiary (with spousal consent of course).

I thought the SCHI issue had been discussed before and assuming plan definition supported and did not specifically exclude that consensus (maybe?) was you inlcuded.

Regarding reasonable classification for average benefits testing - the plan is not naming names for who is eligible or not, this employee is otherwise eligible but is electing to waive coverage.

Satisfy 410(b) using the average benefits test. You will likely need to give NHCE#1 more, and that increase may be more or less than what #2 would have received.

If considered self-employed (sole prop Sched C), yes.

If plan supports and person is not employed by a participating employer within control group, they are excluded. However, if US citizen they are not statutorily excluded and must be included in coverage testing. I assume their foreign paid income would be considered, but the only implication would be for HCE determination.

With apologies to any CPAs on the forum, some have no issues with taking transactional shortcuts if you end up in the same place. Maybe the new overworked and underpaid IRS will say "meh, ok, no harm no foul, these aren't the droids we're looking for, go about your business."

No can do - as @Bri states - company contribution/check, as that is where any deduction occurs and where an IRS auditor would be looking to substantiate. Beyond that, plan sponsor and his accountant can figure out the details to make that happen.

post separation the 100% FAE can be indexed/increased, see my response above (third post)

I don't think that's clear. If you want safety, maybe ignore the statutorily excludable and apply the 6% to the rest.

Yes, assuming the plan allows.

The compensation limit can be increased by some annual COLA percentage after a participant separates, I think most pre-approved plans allow for that. These are less than post-NRA increases but apply from separation. This might delay the required (retro) commencement date. From Google AI: For a participant who has separated from service, the IRC Section 415(b) 100% of compensation limit is adjusted annually for cost-of-living increases. IRS (.gov) +1 The specific percentage increase for recent and upcoming years is as follows: For 2026: The adjustment factor is 1.0284 (a 2.84% increase) for participants who separated before January 1, 2026. For 2025: The adjustment factor was 1.0258 (a 2.58% increase) for those who separated before January 1, 2025. For 2024: The adjustment factor was 1.0351 (a 3.51% increase) for those who separated before January 1, 2024. IRS (.gov) +4 Key Rules for Post-Separation Adjustments Annual Indexing: Under Section 415(d)(1)(B), the compensation limit (the "high-3" average) for a separated participant is adjusted annually using procedures similar to Social Security benefit adjustments. Cumulative Calculation: The adjustment is applied by multiplying the participant's compensation limit, as previously adjusted through the prior year, by the current year's factor. Plan Provision Requirement: A participant's benefit can only be increased to reflect these cost-of-living adjustments if the specific retirement plan document includes language allowing for such scheduled post-retirement increases. Comparison to Dollar Limit: The final benefit remains limited by the lesser of this adjusted 100% compensation limit or the overall 415(b) dollar limit (which is $290,000 for 2026 for those aged 62+). IRS (.gov) +6

Aggregate compensation of DC participants, so I would think so.

Also, it is the plan's fiduciary's decision to continue or forego attempts to recoup the overpayment on behalf of the plan. The RK can pursue or not in their administrative function and to mitigate their liability.