C. B. Zeller

If the 402(g) excess was also a 401(a)(30) violation, then the plan would have to distribute the excess now in order to correct the qualification failure. If it was not a 401(a)(30) violation - for example, because the participant exceeded the 402(g) limit only when combining their deferrals in this plan with another plan of an unrelated employer - then that excess couldn't be distributed until the participant has a distributable event from this plan. In either case, the participant will experience double taxation on the excess; once because it exceeded the maximum they could deduct on their 2022 income taxes, and again when it is distributed.

This is an illegal exclusion unless the plan provides a 1000 hours fail-safe. In other words, the plan must provide that, regardless of the excluded class, a part-time employee who actually works 1000 hours enters the plan. Given that, the plan should satisfy the coverage test when using the option to disaggregate otherwise excludable employees.

Because the plan document specifies a new comp allocation, which is not a safe harbor formula, you have to satisfy the general test (aka the rate group test). However if you calculate your rate groups on allocation rates, instead of on accrual rates, then everyone should be in the same rate group and the test should pass easily. You don't need the gateway because you're not cross-testing. You also don't need the ABPT unless your rate group is less than 70% coverage (which is unlikely to happen, unless, as Lou mentioned, there is an allocation condition that isn't met by a large number of NHCEs).

The plan document will indicate whether the top heavy minimum is computed based on years of service or participation.

10% excise tax on the unpaid minimum, IRC 4971. There is a second tier tax that can increase to 100% if it remains unpaid. You must also notify the PBGC of the failure.

See this thread from yesterday:

Not to push you back towards that ledge, but I do think there is a 415(h) controlled group here. So you do have to aggregate, but only for 415 purposes.

The only "requirement" that I have seen is from the 5500 instructions. This is from the instructions to 5500-SF, there is similar (but more complex, addressing DFEs and such) wording on the full 5500.

taxnotes.com has the functionality you're talking about. The currently displayed section (paragraph, subpararaph, etc) is displayed at the top and updates as you scroll up and down through the document. The cite can be copied by clicking a button. For example ... 26 CFR Section 1.401(k)-3(d)(2) or IRC Section 415(c)(3)

In their comment letter to the IRS dated May 30, 2025, ARA recommended that the deadline be extended by default. https://araadvocacy.org/wp-content/uploads/2025/06/ARA-Government-Affairs-Comment-Letter-2025-05-30-Notice-2024-202.pdf

Since it's a rare circumstance, you won't find it in the list of approved self-correction methods. It sounds reasonable to me, but if the sponsor wants to be certain that they aren't jeopardizing their plan's qualified status, they could submit under VCP.

The SECURE 2 rule only breaks controlled groups between spouses where the controlled group exists solely because of a minor child, or community property laws. The spousal noninvolvement test remains otherwise unaffected. So if they want to continue to have a controlled group (it sounds like they might) then all they have to do is find a way to break the spousal noninvolvement rule; for example, they could participate in the management of each other's businesses, or they could give each other options to buy stock in each other's company.

I saw this on a takeover a number of years ago. There were only two participants in the plan - the owner and one employee - and the owner had been making contributions into the employee's personal IRA. It was a 401(a) violation due to failure to keep the assets in trust. We filed under VCP and had them move the assets into a plan account.

Are the PAs in an affiliated service group with the partnership? (Probably yes - this is the classic ASG scenario, and it would explain why the three doctor partners are able to participate in the partnership's plan even though they are not employees of the partnership. However an ASG determination is highly fact-specific, and the standard advice to consult an attorney applies.) Assuming this is an ASG, then the one doctor could adopt his own plan, but it would have to be aggregated with the partnership's plan for testing. Keep in mind that includes not just benefits (ADP/ACP, etc) but also availability of benefits, rights and features, so he can't for example have an investment in his plan that isn't available to the employees of the partnership.

The preamble to the 2025 proposed regulations also mentions 3121(b)(7) service as an exclusion: https://www.federalregister.gov/d/2025-00350/p-47

Just to be clear, are you looking for a present value calculation using some set of 430/404/417(e) segment rates and either the 2024 or 2025 417(e) mortality table for a given attained age and retirement age? It's not a trivial calculation, although with some effort you could do it in Excel. What software do you use for valuations? I'm sure your software can do the calculation and give you a result.

These are the ones listed in the reg (formatted to be easier to read):

The 401(a)(4) reg lists 9 separate mortality tables that may be used, plus the 417(e) applicable table, for a total of 10 mortality tables. Since you can use any interest rate between 7.50% and 8.50%, in 0.01% increments, that's a total of 100 possible interest rates. So there are a total of 1000 possible combinations of mortality table and interest rate, or 1000 possible APR tables just for cross-testing! I don't think anyone has all of them posted somewhere free for download. I would suggest just picking the ones you use most often and downloading them out of your software.

Even if the plan issues a 1099-R reporting no known exceptions, the individual can still show that they are exempt from the penalty on Form 5329, filed with their income tax return.

It's actually not in 414(s), it's from the definition of "Plan Year Compensation" in 1.401(a)(4)-12. So it's not technically correct to say that it's a 414(s) definition but it is nevertheless allowable for most testing purposes.

Are you using the option to disaggregate otherwise excludable employees from testing? If so, the employees who haven't met 1 year of service (i.e. those who aren't eligible for profit sharing contributions) wouldn't need to receive the gateway minimum. In general, the definition of compensation used for allocations does not dictate the definition of compensation used for testing. You can use any allowable definition of compensation for testing.

The good ol' IRS Rollover Chart explains it clearly: Roll from: Qualified Plan (pre-tax) Roll to: Roth IRA Allowed: Yes (with a footnote) Footnote says: Must include in income.

The instructions for schedule SB line 15: Personally, I usually find it simpler to certify an AFTAP (even if it's not needed) than to create an attachment to the SB.

Correct. All plans maintained by the employer or by a predecessor employer are treated as a single plan for purposes of applying the 415 limit. 1.415(f)-1(a)(1)

If it's a successor employer then the DB plans are aggregated for purposes of applying the 415 limit. In other words the distribution from the prior plan will reduce the max you can accrue in the new plan.