Paul I

CuseFan is correct in pointing out that the 80/120 is used for determining whether the plan must file a 5500 versus a 5500-SF. BPF916, the 1-100 participants for the start-up credit really is not black and white. The count is based on the employer: having 100 or fewer employees (not participants) who had compensation of at least $5,000 (regardless of plan eligibility) in the preceding year (subject to an available election to have the first credit year be the year preceding the year containing the effective date of the plan) There also is a 2 Year Grace Period where the employer is considered eligible for the credit for the 2 years following the last year the employer was eligible. Check out all of the eligibility criteria because there are certain conditions that will disqualify an employer from taking the credit such as the employer was involved with a merger, or there are related companies with existing plans, or if the employer had a plan in the 3 years prior to the new plan. None of this has to do with the 80/120 rule.

Going fully remote with no experience in the field likely will be next to impossible. Consider a strategy that demonstrates a strong work ethic and commitment to learning the business along with establishing some personal contacts with people in the business. Pursuing starting to build professional credentials by enrolling in courses available from industry groups/associations like ASPPA. A QKA (Qualified 401K Administrator) would be a great start, as would a RPF Certificate (Retirement Plan Fundamentals). There are many different types of firms that work with retirement plans - third party administrators, recordkeepers, financial advisors, accountants, banks/brokerage houses... - so explore opportunities with any of these firms that are close enough for starting out with a hybrid approach. Look for professional associations that hold periodic, in-person events. They provide opportunities to connect face-to-face with industry professionals. There also are some mentoring opportunities such as the Thrive Mentoring Program. You can find additional here: https://www.usaretirement.org/get-involved/special-initiatives/thrive-mentoring-program/ It will be a challenge, but the professionals in the retirement plan industry welcome anyone who is committed to working in the field. Best of luck to your daughter!

Peter, you are not overlooking anything. Plans are designed to gather information beforehand about participants and money coming into the plan. This is not built into the Saver's Match design. There is a significant mismatch between how retirement plans are administered and how tax "refunds" (read money paid from the Treasury to an individual) are administered. The simplest way to characterize a recordkeeper taking on administering Saver's Match account is trying to pound a square peg into a round hole. The SPARK comment letter's great detail about the mechanics of moving the money around is just one example of the issues a recordkeeper will face.

Permissible if Pam works long enough to receive 7 paychecks during the year. The comp limit for 2026 is $360,000. Her maximum match is the lesser of 7% * 360,000 = $25,200 (calculated based on the plan match provisions) or 100% of deferrals = $24,500 (calculated based on plan deferral limit), so her maximum match is $24,500. Her maximum match limit is reached when her YTD compensation reaches 7% of $350,000 = $24,500. If she terminates before having earned $350,000 for the year, she will have an excess match that will have to be taken away with earnings (either at the earlier of a distribution or the end of the plan year). Note that Pam would not necessarily have to work 7 consecutive paychecks to get the maximum match. Note further that the plan should not have explicit provisions that apply the match formula strictly on a time period that is less than a full year. These issues would be avoided if the compensation in the match formula was not to exceed YTD compensation versus using the 401(a)(17) limit, and the plan has a true-up. Granted, this caps the match each pay period at a lower amount, but Pam quickly gets up to the max.

First, the Saver's Match has to survive 2026. The topic will start to gather attention based on the mandate for Treasury to report about it to Congress by July. The target recipients of the Saver's Match low- and moderate-income employees, replacing the pre-existing Savers’ Credit for low- and moderate-income employees who make contributions to retirement plans. There are elements rile up anti-DEI advocates such as the multilingual communications, and some analysis published in PlanSponsor magazine that concluded "Plan sponsors and participants both benefit from retirement plans implementing the Saver’s Match because adding it could reduce gender and race disparities in 401(k) balances, finds research from the Collaborative for Equitable Retirement Savings." IRS Notice 2024-65 says: "Section 104 of the SECURE 2.0 Act requires the Treasury Department to take steps to increase public awareness of Saver’s Match contributions, and to provide a report to Congress no later than July 1, 2026, summarizing the anticipated promotional efforts. The report must include a description of plans for: (1) the development and distribution of digital and print materials, including the distribution of such materials to states for participants in state facilitated retirement savings programs; (2) the translation of such materials into the 10 most commonly spoken languages in the United States after English ..." Assuming is does survive, a few recordkeepers at best will offer to receive and separately account for the match, and administer the more restrictive withdrawal provisions. No recordkeeper has access to the information needed to calculate the match or determine if the match calculation is accurate. Since retirement plans are not required to accept Saver's Match contributions and since IRAs can accept the Saver's Match, it is very likely that most plan recordkeepers will not accept it and refer clients to direct employees to IRAs. It is possible that some state-run plans built around IRAs would be more interested in pursuing this.

This issue has hung around since ERISA. The never has been a clarification in regulations or other formal guidance. It was included in a Q&A with the IRS that the IRS again addressed from the podium. Here was the question and response: "59. In a 401(k) plan, does 401(a)(17) preclude the following: A. A earns $300,000 annually. He enrolls in 401(k) calendar year plan in August, after earning $175,000. He defers $10,000 in the balance of the year. B. A earns $300,000 annually. He participates in a calendar year 401(k) plan making monthly deferrals of a flat dollar amount of 1/12 of $10,000 in 1998, even though his pay exceeded $160,000 before he was done making elective deferrals. C. Same as 2, but deferrals are a percentage of pay (3.33333%). We believe that all three scenarios should be ok. This will be discussed additionally from the podium." That's all of the formal guidance, folks! That having been said over a quarter century ago, and after the many, many plans that apply the limits on an annual basis have reviewed by the IRS and not found to be deficient, @401kology it is fair to say you understand correctly. A plan would (and could) have a provision that stops deferrals and match once a participant has YTD compensation that reaches the 401(a)(17) limit, but why would anyone except an uninformed payroll processor think this is a good idea?

@OrderOfOps suggested steps are consistent with the IRS position that, for purposes of determining the year a distribution is taxable, a distribution occurs when the check is written and not when a check is cashed (and likely @ESOP Guy also had this in mind). The IRS took this position what asked about the year of taxation when a participant delayed cashing a check beyond plan year end. If this concept is applicable here, then the check represents an asset in the deceased participant's estate and would be dealt with consistently as any other assets in the estate. Mechanically, the check would be treated similar to checks that age out if not cashed timely.

Check as many boxes as needed to cover however the tests were done. EFAST2 checks to see if nothing is checked and has an edit that issues a Warning, but not an Error. There is no edit for checking multiple boxes.

Assuming (always risky) that the plan in question applies its defined Break In Service (<1000 hours) anywhere where breaks in service are used (determining years of service for eligibility, or vesting, or benefit accrual), then I agree the answer is No. Breaks in service using hours for these purposes are based on no more than 500 hours (or a lower number if an alternative method of calculating hours of service is used). Let's also keep in mind the a plan does not have to use break in service rules (i.e., a Break in Service is 0 hours.) If the plan defined the term Break in Service (<1000 hours) and used it solely in place of some other provisions (like eligibility for an allocation), then this is very poor and misleading plan drafting - essentially replacing a widely understood term of art with a narrowly applicable alternative definition.

Look in Revenue Ruling 2007-43 regarding partial plan terminations and you will find this language: "If a partial termination occurs on account of turnover during an applicable period, all participating employees who had a severance from employment during the period must be fully vested in their accrued benefits, to the extent funded on that date, or in the amounts credited to their accounts." Based on this language, if a not-fully-vested employee was terminated as result of a partial plan termination, the employee would be considered 100% vested in their accrued benefit at that time. If this former employee subsequently is rehired, then their vesting percentage in any new accrued benefits would be determined using the vesting crediting rules of the plan document. The full vesting due to the partial plan termination does extend to or supersede the plan's vesting rules applicable to the new accrued benefits. I have not seen anything that support grandfather the full vesting due to the partial plan termination.

Okay Boomers, where's the love for Visicalc? https://www.historytools.org/software/visicalc-of-dan-bricklin-and-bob-frankston-guide

Ask the questions @Peter Gulia provided above to assess whether there is an issue. Focusing on the recordkeeper's service agreement or mutually agreed-upon administrative procedures, keep in mind that the processing date (validations, control totals, compliance checks, available investment elections, ...) are data activities that precede the actual crediting payroll to participant accounts. The segregation of the payroll dollars (funding) from the control of the employer is the actual funding date (which is looked at by the DOL to determine if something there are late deposits). Typically for many plans, the movement of payroll dollars is an overnight process. An aggressive interpretation of when the actual funding occurs would be to say it happens on the date of the instruction of the transfer of funds to the recordkeeper. Another possible interpretation is the date the funds leave the control of the employer. Another possible interpretation is the date the funds arrive at the recordkeeper. A very conservative interpretation is the date the funds are invested. Smaller recordkeepers do not have the financial resources to front any funds to their clients. Major recordkeepers may make funds to be available for investment on the payroll date (or date payroll is approved for investing), and the recordkeepers coordinate the date of investment with the date of receipt of funds from the client. Theoretically, this is near perfect coordination of activities. In reality, stuff happens, and the timing goes off the track. As long as this is not a recurring pattern or a purposeful manipulation of funds, it does not seem to be a cause for concern for the regulators.

Let's face it. A client complaining about giving the SHNEC to terminated employees more often than not is motivated by two things. The first is greed. The client likes the idea that they can maximize elective deferrals and think nondiscrimination tests are unfair to HCEs (and they abhor refunds). The second is the perception that terminated employees were not committed/loyal to the company and should not be "rewarded" with a 3% contribution (even though the SHNEC is very much akin to the employer funding payroll taxes). Sometimes the message has to be if the client wants the privilege of avoiding nondiscrimination testing (i.e., being able to maximize deferrals), the cost of that privilege is the 3% SHNEC. That being said, when a significant number employees do not defer, changing the plan design to a Safe Harbor Match often reduces the overall employer cost which seems to somewhat placate the client (until the employees catch on and start deferring more). Kudos to @Tom for trying to be responsive to his client and taking a wild shot.

From the way the OP is worded, it sounds as if the client does not want to assume any responsibility for signing a plan document without fully understanding what they were signing, and they now want to declare this is totally the TPAs fault. One thing that is almost always certain, when the IRS discovers a disconnect between the plan document and plan operations, the plan document governs and the plan sponsor is accountable for the content of the document. The only instances where the IRS possibly may be possibly swayed on a hope and a prayer is if there is an overwhelming amount of documentation contemporaneous with the adoption of the plan and the original intent to have certain provisions that were not reflected in the document. The IRS more likely be agreeable to accepting the retroactive application of plan provisions that are favorable to participants and are not discriminatory in operation. Given the changes in question, there should be no issue with accelerating the vesting schedule, but be careful with the change in NRA for any participant who is withing three years of age 62 (since attaining NRA would trigger full vesting). Be a little wary of this client who will blame you when something goes off the rails, and make sure you maintain documentation of source data and any operational issues when they arise. This is particularly important in this environment when plans can be administered base on documented administrative procedures that have not yet been codified into the formal plan document.

We work with an outstanding service provider who services Southeastern Pennsylvania. If you are in this geographic ares, I can send you their contact information. Based on experience, I recommend in making your decision you consider the breadth and depth of a provider's technical support (in particular responsiveness), security (including availability of full encryption of all transmissions of email, data and storage), access to leading state-of-the-art technology, and cross-platform support (including computing, phone service, operating systems and hardware). The cost of these services almost always is higher than one would guess, but that often is because the outstanding providers provide more value for what most people don't even know they need. Consider documenting what services you will be providing to your clients over the next 2-3 months, and seeing if there is a way to deliver those services without compromising the integrity of clients' data, and be prepared to discuss with a successor provider strategies to get support through a transition period. In our business, we have an obligation to protect the information entrusted to us.

Since there are very good reasons to be suspicious of the request, you and the plan's fiduciaries need to protect the plan from potential fraud. Otherwise, if the request is fraudulent, then there will be a lot of finger-pointing (and potentially litigation) about who will make the plan and participant whole. If there is a concern about inviting the individual into your office or the client's office, consider choosing a public, safe place to meet. This could be at a bank or even at a police station, depending upon the level of concern. The purpose is to arrange for a notary or plan representative to validate the individual's identity. Ideally, someone who could recognize the participant could be available. If the level of concern is at the level that the plan fiduciaries are comfortable just having an election form notarized without their being present, then consider listing on the document being notarized specific items for the notary to confirm was presented at the signing. This could be at least one item with a picture (like a driver's license), and any additional documents that would acceptable like an original Social Security Card, Medicare ID or something similar. Ultimately, it is the plan fiduciaries call on how to approach the issue, but you need to make it abundantly clear to them that you believe additional steps need to be taken to confirm the participant's identity. We have not dealt with this particular set of circumstances, but have had a couple of incidents where we expressed our concerns to the plan fiduciaries and worked with them to document the participant's identity to their satisfaction. These are just some thoughts and is not advice to anyone.

Before launching a project to take over administration of beneficiary elections, find out is considered the existing primary source for capturing and maintaining beneficiary elections. Many employers are the primary source and keep originals (or certified copies) of beneficiary election forms along with other employee records. Their motivation often is to be able to work with survivors and executors deal with death benefits across multiple insurance and benefit programs. The service agreements with providers should document who is the primary source of records, and communications to employees on how to make elections should be clear about how to make their elections. I agree that reminding participants relatively frequently to review and update beneficiary elections is a best practice. I also is best practice to make this a step when dealing with changes in family status such as marriage, divorce, birth of children and other similar events that are likely to result in changes to beneficiary elections.

The answer is tied into the definition of "principal residence" (likely what you meant by "primary residence") which in turn is tied into other rules related to tax deductions allowed for interest on home mortgages and their associated tracing rules. See IRS Regulations 1.72(p)-1 Q&A-5, 6 and 7. "Q-5: What is a principal residence for purposes of the exception in section 72(p)(2)(B)(ii) from the requirement that a loan be repaid in five years? A-5: Section 72(p)(2)(B)(ii) provides that the requirement in section 72(p)(2)(B)(i) that a plan loan be repaid within five years does not apply to a loan used to acquire a dwelling unit which will within a reasonable time be used as the principal residence of the participant (a principal residence plan loan). For this purpose, a principal residence has the same meaning as a principal residence under section 121. Q-6: In order to satisfy the requirements for a principal residence plan loan, is a loan required to be secured by the dwelling unit that will within a reasonable time be used as the principal residence of the participant? A-6: A loan is not required to be secured by the dwelling unit that will within a reasonable time be used as the participant's principal residence in order to satisfy the requirements for a principal residence plan loan. Q-7: What tracing rules apply in determining whether a loan qualifies as a principal residence plan loan? A-7: The tracing rules established under section 163(h)(3)(B) apply in determining whether a loan is treated as for the acquisition of a principal residence in order to qualify as a principal residence plan loan." The tracing rules deal with identifying when the acquisition indebtedness was secured by the qualified residence. Also see IRS Notice 88-74 that defines acquisition indebtedness that provides an alternative of 90 days from the date of the loan as an alternative to the section 163(h)(3)(B) tracing rules in Q&A-7. Frankly, I have never seen any plan loan provisions or plan loan policy provisions or related promissory notes that specify a time period by which time the participant must begin residing at the property. Conceivably, provisions could be added to the plan or policy. Further, participants could be asked at the time of the loan is requested to certify that the property will by occupied within the prescribed time frame. If there is a lingering concern that somehow the extended time available to repay a loan for a principal residence, then consider something like it the property is not used as a principal residence within 5 years, the loan will be declared not to be a for a principal residence and will become immediately due upon reaching the end of year 5 of the loan term. Keep in mind that if the plan imposes restrictions, then the plan must make them applicable to all similarly situated participants and must administer the restrictions.

Before adding a new contribution source to the plan design, find out it the plan is top heavy and if yes, are any of the HCEs non-key employees.

@Peter Gulia, you may have seen this recent article titles Suit Says IBM’s Custom TDF Benchmarks ‘Insufficient’ https://www.napa-net.org/news/2025/11/suit-says-ibms-custom-tdf-benchmarks-insufficient/?ite=49712&ito=1681 It will be interesting to follow its progress to see if this type of litigation spreads to other plans, or even to mutual funds companies that use DIY benchmarks. This could be a motivation for a plan's legal counsel to provide input into a plan's investment benchmarks.

A form of this question was posed in the ASPPA 2002 Annual Conference - IRS Questions and Answers question 5: 5. If a 401(k) Profit Sharing Plan uses an individual funding vehicle with a $2,000 threshold and the business owners are able to immediately move into this funding vehicle that had multiple investment options, but non-owners with smaller 401(k) contributions are in a pooled money market until they reach the $2000 threshold, is this discriminatory? What if the threshold is $10,000? $25,000? $100,000? This is a benefits, rights and features issue and, depending on the facts, could either pass or fail. Also note that SDBAs got a lot of attention in EBSA's Field Assistance Bulletin No. 2012-02R, not about a dollar threshold, but about all of the disclosures that must be provided to all plan participants about SBDAs as an investment option.

Getting stiffed for providing professional services in good faith almost always ends with a feeling of regret including what you shoulda, woulda, coulda have done differently to have avoided the situation. Your question in particular asks what would be ethical ways to proceed. As an EA, you are subject to the Joint Board for the Enrollment of Actuaries and its Standards of performance of actuarial services which includes guidance on what is considered "records of the client". You also should be aware of the ethical standards of any professional organization to which you belong such as ASEA, SOA, ASPPA, AAA... Generally, while there are differences between each organization's code of ethics, if you delivered work product prior to receiving payment for those services, you cannot withdraw or invalidate a client's reliance on that work product. Generally you do have a right, absent any formal contractual obligation, not to perform future services. You appear to have a direct relationship with the plan sponsors since you have filing authorizations and also because you personally sign the Schedule SB. If ultimately you decide not to perform future services for the client, you should notify them in time for them to find another actuary, but you may find in some of the applicable codes of ethics that you should not disclose the reason is the TPA did not pay your fees. If this is the case, consider offering to continue working directly with the client as a change in your business model. Keep in mind that it is the TPA that is not paying for your services, but it is the plan sponsors who are using and relying on your services. The ways to proceed you listed have an element of vengeance or punishment which commonly is driven more by emotion, and it is the plan sponsors (not the TPA) who would suffer by attempts to remove the SB. Temper the emotion, seek legal counsel about how to proceed about getting paid for services delivered, and get some guidance on the cost of exploring legal paths forward in terms your time and expense against the known cost of writing off uncollected fees. Do take some time to implement, maintain and follow the terms service agreements and engagement letters with the TPAs and clients.

@Bri is correct in pointing to the plan documents - adoption agreement and basic plan document - as a starting point. Conceivably, an amendment that says the spouse is eligible immediately could be simpler approach. This does assume that the spouse has earned income from the company. Be very careful as the employment of a common law employees can become a minefield for owner-only plans (OOPs!) For example: Some pre-approved OOPs documents have provisions that say as on the date there is an eligible common law employee, all contributions to the OOPs stop immediately on that day and the company needs to adopt a traditional plan to provide for any contributions to anyone after that date. If the common law employee becomes eligible to defer as a Long Term Part Time Employee, then the plan will no longer be an OOP.

Stepping back a little, it's important to keep in mind that the purpose of the 5500 is for the agencies to fulfill their obligation to provide oversight of ERISA plans. In the words of the Troubleshooters Guide To Filing ERISA Annual Reports, "The information in the [5500] annual report is carefully reviewed by the DOL, IRS, and PBGC for compliance with applicable reporting requirements and used for enforcement, compliance assistance, research and other purposes." Generally, the DOL, IRS and PBGC each year contribute additions to the form or request removal of existing items depending upon each agency's strategic plans and more specifically each agency's initiatives to assess topics that may require providing additional guidance. The ebb and flow of these areas of focus is reflected in the periodic changes in the forms. That being said, the information collected on the form has value for purposes of enforcement. The agencies commonly announce as part of their annual operating or strategic plans, topics that will be subject to scrutiny. Plan sponsors and service providers need to "read the tea leaves" and anticipate whether a plan likely has a compliance or operational issue that warrants added attention before the plan receives a love letter from an agency. The agencies have published the edits that applied to the information provided on the Form 5500, and most 5500 software developers have integrated these edits into their products. Notably, the edits vary from a full stop or failure of the filing to warnings and observations of possible concerns. The market place also demonstrates the value of the information collected to mine for prospective clients that fit a service provider's targeted profile. Those who sell to fear, or exploiting perceived or even actual weaknesses in a retirement plan’s administration will not hesitate to leverage this information, including sounding alarms over issues that do not exist for a plan. Ideally, reputable service providers will incorporate into their operations and more specifically into the 5500 process a review of key indicators of operational and compliance issues, and inform the plan sponsor and plan administrator. The ability of anyone to download historical 5500s makes it easy to gather information about a plan and identify indicators of operational issues and trends towards noncompliance. One particularly valuable exercise for large plans is to compare the contents of the audit report to the information provided on the form. There are far too many to list in a single post, but here are some examples: Does the description of the plan features in the audit report match the plan characteristic codes? Does the audit report describe events like corporate events that could cause fluctuations in participant counts which in turn could flag a change in audit requirements or possibly a partial plan termination? Are there any assets listed in the audit report that are known to cause operational headaches (real estate, art, life insurance...)? Is the disclosure of late deferrals consistent with the response to the question on the form about late deferrals, and are late deferrals a persistent problem? Is there an indication that the plan sponsor is part of a controlled group, but there is no indication that coverage testing across the controlled group was reviewed? Are there "Other" contributions reported without some explanation of what they are? Was there a a change in service provider that was disclosable on Schedule C, but was not disclosed? .... and the list goes on. All of this having been said, it will not be a reach to have the industry and the agencies dump all of the historical 5500 data files and audit reports into a single data source and use AI to identify the interrelationships among the data elements collected on the forms.

They look only at the amended return. If the 5558 box is checked, they will see that the original filing was put on extension. The very short version is you don't file an extension for an amended return, but an amended return should disclose that the original filing originally was extended.