Artie M

As far as I know, there is no clear statement in 2021-30 (or related guidance) regarding this issue. EPCRS guidance seems to measure the correction period from when the failure first occurred for the "affected eligible employee" [singular]. 2021-30 AppA.05(9). The guidance points to correction periods. That seems to support distinguishing between employees. But as you parenthetically note EPCRS generally requires corrections to be consistently applied. However when you look at the consistency requirement it points to errors for a plan year "Generally, if more than one correction method is available to correct a type of failure for a plan year (or if there are alternative ways to apply a correction method), the correction method (or one of the alternative ways to apply the correction method) should be applied consistently in correcting all failures of that type for that plan year." S6.02(3). I haven't done the historical research but I think this rule has been around since the program was established. I am saying this because I don't think the corrections provided for periods of less than a plan year were in place back then (e.g., the 3-month safe harbor). Also, treating employee groups differently arguably doesn't necessarily violate a "similarly situated" concept. A participant who missed deferrals since 2024 is not similarly situated to a participant who missed deferrals since 2026. The fact that EPCRS provides different corrections for these different groups in and of itself seems to support being able to correct their specific MDOs using the safe harbor that applies to that specific MDO. Regrettably, these are just my thoughts.

not sure if your premise is totally accurate. I am assuming this plan is maintained by a tax-exempt non-governmental entity. As stated above a nongovernmental 457b is generally a top hat plan. Assuming the plan is maintained primarily to provide deferred compensation for a select group of management or highly compensated employees, it generally qualifies for the top-hat exemptions under ERISA 201(2) — participation and vesting; ERISA 301(a)(3) — funding, and ERISA 401(a)(1) — fiduciary responsibility. But critically, those exemptions do not exempt the plan from ERISA Title I altogether, including 514(a), the express preemption provision. The plan could still be outside of ERISA but it would depend on how it is administered, etc. otherwise, it often remains an ERISA employee pension benefit plan for purposes of preemption. You need to verify if this is a top hat plan, was the former spouse on a valid beneficiary designation, and, I think most importantly, did the divorce decree include a waiver or other provision affecting the benefit (the waiver issue is split among the circuits and is an end run on the divorce decree statutes). If there is an enforceable waiver in the divorce documents, you may have a meaningful recovery claim against the former spouse. If your claim rests exclusively on automatic statutory revocation, considerably less confident, particularly if the §457(b) plan is ERISA-covered. if it's me, the single most important fact I'd try to obtain next is does the divorce decree contain a waiver of retirement benefits, or are relying entirely on the state's automatic revocation-on-divorce statute? That would determine which course I would pursue. Go look at Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012) and Andochick v. Byrd, 709 F.3d 296 (4th Cir. 2013). As noted in my sign off, not advice just spouting off here...

I was under the impression that you weren't sure if you could be the beneficiary. If you KNOW you are not the beneficiary, is this just a fishing expedition? I will assume you have some kind of colorable claim. Beneficiary forms normally contain the plan/contract that they relate to, as well as the primary and contingent beneficiaries. Note that if you know the ex spouse was the primary beneficiary, it does not good for you to be the contingent as the ex spouse is still alive. If you have a colorable claim, then you should just make a claim as the beneficiary. Then they will have to deny it, etc. A 457 b is not required to have an SPD, though some will have summaries. so often times there are no claims provisions. In such cases, you usually contact the plan administrator, here likely the employer, for a copy of the claims procedures, deadlines, etc. In many top hat plans, the exec knows where to go for the benefit so that would be the person they would contact. Not sure what your other plan is.... if 403b ... sounds like a tax exempt employer... it may not need an SPD either... depends on it if it covered by ERISA or not (some are and some are not, depending on the contributions, etc.).

The phrase "funded" means something different in this context. there is the legal meaning and the generic meaning. 457(b)s, if properly structured, are legally unfunded. Did you ever file a claim for benefits under either of these plans. Though 457(b)s, if properly structured are not governed by ERISA, they still have to follow the ERISA claims and appeals rules. When did the participant die? You never state that... there is a statute of limitations on claims, depending on the state you are in or the terms of the plan. Assuming the statute hasn't run, you could have filed a formal written claim under the plan. Under the rules the plan administrator can't ignore a form written claim and they are required to issue a formal written denial letter. Under the regulations, that denial must explicitly state the exact reasons and cite the specific plan documents or forms they relied on to pay out the benefits. Furthermore, under ERISA claims rules, once an adverse determination is made, the claimant has a right to request and receive copies of all "relevant documents, records, and other information" free of charge. This is the mechanism that legally forces the employer to hand over the beneficiary form that was used. Also, if you go to court without following this form administrative claim procedure, the employer will have an affirmative defense that you failed to "exhaust administrative remedies" which could easily cause your case to get thrown out. If they don't respond to your claim, that affirmative defense goes away, and also you might be able to go to the DOL with a complaint. Depending on the amount at stake, you should get a lawyer,.... but if you do, make sure you get one that is conversant in these rules and not some personal injury lawyer who has some down time.

I think it includes both. In the enrolled text, the phrase 'good faith reliance' appears in the adequate consideration definition: an ESOP fiduciary may rely in good faith on an independent expert’s valuation using RR 59-60 principles. The next clause expressly states that this rule does “[not] modify any fiduciary obligation under ERISA 404." So, on its face, the law is intended to preserve both the exclusive-purpose duty in 404(a)(1)(A) and the prudence duty in 404(a)(1)(B). I think "plausible method" perhaps understates what the text is trying to do (I don't profess to know what Congress is trying to do). Here, an ESOP fiduciary will be able to rely in good faith on an independent appraiser’s valuation when the appraiser uses 59-60 principles and methodologies. That's more than saying 59-60 is one acceptable reference--but it addresses the fiduciary’s reliance on the resulting valuation. I don't think it deems every valuation produced under the 59-60 "framework" to be adequate consideration, as it expressly preserves 404 duties. Also, you hit the central limitation of the bill on its head because, said another way, even a sound framework cannot cure unsound inputs. I think the law, if enacted, would authorize good-faith reliance on an independent valuation prepared under 59-60, but the fiduciary must still have a prudent basis for relying on that particular valuation, which includes its material information and assumptions (its "inputs"). It wouldn't make the appraisal self-validating.

To me, the Act does not modify a fiduciary's obligations under ERISA Section 404, including the duties of prudence and loyalty. An ESOP trustee could not simply obtain an appraisal and consider the fiduciary inquiry complete. The trustee would still need a sound process for evaluating the transaction and the supporting valuation, including projections, assumptions, financing terms and other relevant information. The Act purports to protect good-faith reliance on an independent valuation—not blind reliance on one.

Unless you have A and B backwards, your facts differ materially from the usual situation. I understand terminating the target’s plan (B's plan) before closing. But here the Buyer A terminated its own plan, survived, and then adopted the target’s plan. Doesn’t that mean the same employer identified at termination is maintaining an alternative plan during the restricted period?” (assuming the 2%, 24 month exception doesn't apply). Said another way. A is the employer at plan termination, A survives, and A then adopts B's plan during the restricted period. on those facts, B's plan seems like an alternative defined contribution plan barring distributions of restricted amounts solely on account of A's plan termination. Pre-closing execution or effectiveness doesn't resolve that problem.

Ha. @Peter Gulia always asks the most important question first... Have you gotten paid? Rev. Proc. 2021-30 §4.07 expressly permits VCP or Audit CAP correction for a terminated plan even when its trust no longer exists. Thus, at least the IRS believes you can still have a plan even if no assets (my view is no trust = no assets). If the employer has no resources, perhaps consider a VCP proposal documenting the insolvency and available recovery; but of course don't assume the IRS will waive funding. From a DOL fiduciary standpoint, the unpaid employer contributions generally differ from withheld employee deferrals: the employer’s unpaid cash is not automatically a plan asset. However, the plan’s contractual right to collect contributions can be an asset. Did the responsible fiduciaries consider and preserve a claim to those contributions in bankruptcy, including any filing deadline and realistic recovery. Owners or committee members do not automatically become personally responsible merely because the company cannot pay; their conduct and the governing documents matter. Yes, the uncorrected disqualification could affect prior distributions and rollovers. However, that is a potential consequence, and not up to you do determine that every rollover is already invalid. Distributions from a disqualified plan are not eligible rollover distributions—one reason to address qualification despite the empty trust. However, it its the IRS that disqualifies the plan. Here, the consequences though would really harm the participants. You should at a minimum coordinate with bankruptcy counsel...they and the court would have to guide you as far as VCP and recovery, etc. This is a definite CF.

So, counting 10 days from October 5 and excluding Sunday, the apparent deadline is October 16, subject to the constitutional rule concerning an adjournment that prevents return of the bill.

I guess the new rules seem to say you don’t have to put in the additional earnings, though under the old rules you would Here are my thoughts: The erroneous portion of the distribution constitutes an inadvertent benefit overpayment within the meaning of 414(aa) and Notice 2024-77. 414(aa), added by SECURE 2.0(?), generally provides that a qualified plan will not fail to satisfy 401(a) merely because the Plan does not obtain repayment of an inadvertent benefit overpayment. 2024-77 provides that the corrective-payment requirements otherwise contained in Rev. Proc. 2021-30 §6.06 generally no longer apply to an inadvertent benefit overpayment. Although recovery now is not required to preserve the Plan's qualified status, the HCE has voluntarily agreed to return the overpayment. So, under these rules it seems the HCE would return to the Plan the $5,000 overpayment and the earnings attributable to the $5,000. 2024-77 says that no additional payment by the employer is required solely because of the inadvertent benefit overpayment. Note under the 2021-30 §6.06 the employer may have had to return the overpayment plus earnings. I looked at 2024-77 again and Q&A-2 is unusually strong, providing that, subject to the specified exceptions, “any requirement described in section 6.06 of Rev. Proc. 2021-30 that a corrective payment be made to a plan … no longer applies.” That means to me that post-distribution earnings are no longer mandatory, just like a potential employer-make-up. One item… to not do earnings though, note that 2024-77's definition excludes an overpayment to a §4975 disqualified person or §401(c) owner-employee. You said this HCE is not an owner, so that exclusion does not appear to be a problem—but you should confirm they aren’t otherwise a §4975 disqualified person (officer, 10% shareholder, etc.). I don’t think it’s a big deal because they’re returning the overpayment. However, if they don’t meet this definition, then I think you go back to including earnings as you go back to 2021-30. Some could say just include earnings to be sure, but note that if you aren’t required to provide earnings an argument could be made that you are favoring the HCE and permitting them additional deferrals… . haven't thought that through.

In my experience, a cp220 for a retirement plan includes the late filing penalty and not just corrections or changes to the form 5500. The notice should state the tax period to which it relates. It is my understanding the IRS processes account adjustments on a per-year basis meaning they don't combine multiple calendar years into a single notice cp220. Bottom line... if your client received only one cp220 it should be tied to one specific year. Look at the tax period on the top right. This likely won't make your client feel better because if the first two years were late, the client should expect to receive another notice cp220. First thing I would do is call the IRS to get the facts. Usually there is a number in the right hand corner of the cp220. If you're a CPA, enrolled agent (I think that is the term) or attorney with a signed 2848 on file for this client, call the practitioner priority service (if you do this, have your 2848/8821 ready and say you are calling about an employee plans master file Form 5500 penalty assessment and they will route you to the right person). Otherwise, call the IRS Employee Plans customer account services line. Sorry, I have the numbers somewhere in my emails but I am not finding them. As far as DFVC... I would argue that the client is still eligible for the DFVC. Eligibility is only cut off if the DOL sends a written notice of intent to assess a penalty. Receiving a penalty notice or letter from the IRS (such as a cp220) does not disqualify the plan from using the DFVC. We did this recently. Note that strictly speaking the DFVC was designed for unfiled forms. To retroactively apply DFVC protection to a return the IRS already has, you must submit an amended filing through EFAST2. When you prepare the amended Form 5500-SF to correct the situation, you actually have to deal with two different dates: The Plan Year Dates (Part I, Box A): These should be exactly the same as the original late filings (e.g., May 1, 2021 – December 31, 2021). This tells the system exactly which historical period you are correcting. The Transmission / Execution Date: When you electronically sign and submit the amended form via EFAST2, the system automatically stamps it with today's current date. Then, when you log on to the online DFVC Penalty Calculator, it will ask for the Date Filed. Here, you must enter the date you are submitting the amended DFVC return, NOT the original late filing date from years ago. Entering the original date will confuse the system because it calculates the late fees based on the day you are actually submitting the correction and paying the fee. By submitting the amended return with Box B (Amended Return) and Box D (DFVC Program) checked, you are effectively telling both the DOL and IRS: "We know we filed this late before, but we are now retroactively pushing it through the amnesty program and paying the proper capped fine." Once EFAST2 accepts the new, current-dated amended transmission, you will get a new electronic filing receipt. Use that brand-new receipt as your primary evidence to send to the IRS to request they wipe out the cp220 notice.

Yes, that is not uncommon from our experience. Most/many correct the election prospectively but hold off on determining/funding the MDO QNEC until after year-end, then determine the total actual elective deferrals. If reached max, no missed deferral and no MDO QNEC. If there was an improper exclusion instead of failure to implement election, have to wait to year end anyways before know HCE's ADP. Caveat--though likely got their match... determine whether the failure cause them to miss a match. Per pay period, etc. might cause a quirk.

you don't provide enough facts but have you looked at utilizing SCC for some of the delinquencies. Not sure if others agree, but we have looked at those rules and their history and we do not see where it states that only violations post 3/2025 are eligible. The SCC rules focus on how promptly the employer corrected the underlying delinquency and not when the SCC filing occurs. The effective date language of the final rules don't change that and there is no grandfather/transition rule. If some of the 2023 deferrals were corrected within 180-days of the error then they might be able to fall under SCC. As far as your question, the final rules state that you can (should?) treat each pay period separately: "Generally, the Department has considered each pay period as a separate transaction; however, the Department has permitted more than one pay period to be treated as one transaction under the VFC Program if the pay periods are close together in time and the delinquencies are related to the same cause." https://thefederalregister.org/documents/2025-00327/voluntary-fiduciary-correction-program?

If the plan covers only a 100% owner (or owner and spouse), it is generally not a Title I ERISA plan because the owner/spouse are not treated as employees for this purpose. DOL has expressly taken that position. Consequently, the DOL plan-asset rule in §2510.3-102—earliest date reasonably segregable and the 7-business-day small-plan safe harbor—is not the governing rule for that owner-only plan. Also, like @Peter Gulia says subject to state law because you don't have 514 pre-emption. Not sure though if look at State fiduciary law or simply State wage payment rules. It's a wage deduction. In Texas, where I am, I wouldn't be too concerned under wage payment law because there doesn't appear to be a DOL analogue for when the payment has to be transferred. Also, presumably, they get a regular paycheck..... and, presumably, the amounts were withheld and never paid to the owner. Then under the federal tax code they would get until 9/15 to fund and arguably not delinquent. But as always... what does the plan say?

Seems like it, assuming the payments represent compensation for the doctor's services performed while he was still employed rather than some separate payment triggered by retirement. Treas. Reg. §1.415(c)-2(e)(3) expressly includes “commissions, bonuses, or other similar payments” that would have been paid to the employee if employment had continued. The fact that his compensation is calculated by reference to A/R actually collected after retirement doesn't appear to prevent it from qualifying. The underlying question is what the payment is for. If, for example, his employment agreement says that he receives X% of collections attributable to medical services he performed while employed, those payments look like deferred payment of compensation for pre-severance services—quite analogous to a commission that isn't determinable/payable until the customer pays. Section 415 compensation itself includes compensation based on a percentage of profits and commissions, and §3401(a) wages broadly include remuneration for employee services regardless of the basis on which it is calculated. So if he “retires,” September 30, 2026, and the plan has a calendar-year limitation year then A/R payments through December 31, 2026: potentially includible, because December 31 is later than December 15 (2½ months after September 30) and A/R payments January–March 2027: not §415 compensation, notwithstanding that they remain W-2 wages and notwithstanding that they relate to services performed before retirement. That said, look at the A/R compensation provision to confirm that the payments are attributable to services performed before retirement and would have been payable under the same compensation arrangement had he remained employed.

Yep, need to read the rules... do they need to make sure the amendment explicitly states they are taking advantage of this rule? I worry when it says "may be excluded".

agree with above. In your facts, the new employee presumably is an NHCE for 2026 and sounds like the only person in the early-entry component. If properly drafted, that component should have no meaningful ADP problem because there is no HCE in it. So you should be able to let them defer immediately without giving them the 3% NESH, but only if the amendment deliberately creates that otherwise-excludable/separate-testing structure. see @CuseFan I haven't scrutinized the TH rules recently but not sure there isn't an issue if the plan is already TH. I thought that if an OEX is actually made a participant in the TH plan then they are not excludable. one of the Reg 416 Q&As says that every non key who is a participant in the TH plan must receive the minimum. I remember one that says something to the effect that if employed at year end they get it even if fail to complete 1,000 hrs. I think there is a distinction... if don't admit early, no DC TH minimum... if amend the plan to let them defer immediately, they become a participant even though not age 21/1year. Agree that they can separately test for ADP but not sure that gets them out of TH. If in TH then, also its 3% of full year comp and not just the part year comp. This then gets you to economically no difference in excluding them. also combined DB/DC safe haven minimum should apply since they don't participate in DC plan... I think.... I point you to the 416 regs... I definitely could be wrong but always look at the source authorities.

it is also common in a stock sale that a buyer will want the seller to terminate its 401k plan immediately prior to closing. See 401(k)(10)(A); Reg. 1.401(k)-1(d)(4)(i).... a 401(k) plan termination does not permit distribution of elective deferrals if the employer (determined on a controlled-group basis) maintains or establishes an alternative defined contribution plan, subject to the regulatory exceptions. So after closing, if the 401k is not terminated, it generally would nave to be merged into the buyer's 401k (assuming they have one). Also almost everyone vests, the contributions have already been made and the loss is just the forfeitures that may be generated in the future (SH plan so the matches are already 100% vested).

Agree with @WCC, especially the caveat "unless the plan document says otherwise." 401(a)(17) does not itself provide that the first dollars paid during the year eat up the annual comp limit. If the plan defines comp for matching purposes as salary excluding bonuses, the excluded January bonus ordinarily doesn't eat up the limit. However, the plan document controls, including whether compensation is determined annually or by payroll period and the order in which the bonus exclusion and §401(a)(17) limitation apply. See Code §401(a)(17) and Treas. Reg. §1.401(a)(17)-1(b). That is, what if the plan stated Compensation means the first $360,000 of W-2 compensation paid during the year. Bonuses are then excluded from compensation used for matching contributions. plus, if the plan expressly calculates the match separately for each payroll period, the document and administrative procedures become especially important. Treas. Reg. §1.401(a)(17)-1(b)(3)(iii) recognizes formulas that determine comp and accruals for periods shorter than 12 months and generally requires a prorated comp limit. That said, merely depositing the match each payroll period doesn't make each payroll period a separate determination period. Many plans fund matches per payroll but calculate matches on annual comp, sometimes with an annual true-up. Presumably, the bonus exclusion satisfies the applicable 414s, 401a4, and 401m requirements.

Generally speaking, terminating the plan at closing by September 30 should not be a real issue. Seller should adopt the termination resolutions and amendment before closing, effective September 30 subject to and contingent upon closing. Note that legally terminating the plan does not mean that all the amounts must be distributed by that day, etc. Basically, what would occur is that on and after that date of termination there would be no additional contributions or participants. The plan participants' accounts would, however, to the extent not vested, be 100% vested as of that date (SH so should already be vested). The plan also would still have to be administered until the distributions are made. In an asset sale, the seller normally remains the plan sponsor after closing. The transferred employees generally incur severances from employment with the seller, potentially creating distributable events independently of plan termination. The seller doesn't lose authority over the plan in the way it usually would in a stock sale so it can continue administering until all amounts distributed, but the transaction agreement should address final contributions, payroll data, loan administration and post-closing costs. Neither ERISA nor the Code generally requires this type of plan to give participants a specified advance notice merely because the employer adopts an amendment terminating the plan. (204h applies to DB plans or MPPs when benefit accruals are significantly reduced, but not to ceasing contributions under a 401k/PS plan). Under your facts, no 204(h) notice, no separate 30-day SH suspension notice assuing the termination qualified under the transaction exception, blackout notice only if the RK will impose an actual terporary freeze exceeding 3 consecutive busines days and at the distribution stage, participants must receive the usual §402(f) rollover notice, direct-rollover election, §411(a)(11) consent notice, where applicable, QJSA notice and consent, if the plan is subject to §417; and loan-offset information, including qualified plan loan-offset treatment if applicable. SMM will be needed but practically speaking issue a combined termination/SMM notice before closing communicating the termination to the participants and that likely would suffice. Separately, termination of the seller’s entire workforce should be reviewed under WARN and applicable employment-notice rules, but that is distinct from your 401(k) notice question.

On your second question... if a P dies, a distribution from their designated Roth account to the Bene will be a qualified tax free distribution if the P’s applicable 5-year period has been satisfied. If it hasn't, the portion attributable to basis is tax-free, but the portion attributable to earnings is taxable. The available forms and timing of payment are determined by the plan's terms, including §401(a)(9)... also, they may or may not be the same as those applicable to the P’s pre-tax account.

In your facts it appears that the client has gone to the EOR and seen what they provide and is disheartened, mainly because the packages won’t be the same in each country. Well, sorry, they just won’t be. In certain jurisdictions certain benefits may be unavailable (insurers may not cover a low number of employees for certain benefits), the tax treatment might be untenable, benefits may be duplicative of government required benefits, or the EOR’s systems may not be able to administer the desired benefit. The first thing to look at is the EOR package (default or other) for each of your jurisdictions. A good EOR ordinarily knows mandatory local benefits and social contributions, what’s market in that jurisdiction, potential insurers, tax treatment, nondiscrimination or equality requirements and can its systems administer the benefits. Meanwhile, the client should establish a limited set of global minimum benefit principles/framework. This would be like standards of protection, not actual benefit designs. Eg, employees should receive employer-sponsored medical coverage or access to a national healthcare system that provides reasonably comprehensive local care. That works better than requiring every employee, for example, to receive the same US PPO coverage. The idea is to have kind of a minimum that the client feels the employees must have no matter what jurisdiction—again, this minimum is not specific coverage—and is just a generalized standard. So, look at the EOR’s standard local package(s) first, evaluate them against the client’s short global-minimum framework and local market data. The EOR’s standard local package or default offering shouldn’t necessarily become the client’s benefit policy. Then, for each jurisdiction, ask the EOR for specific local data/info, including what does local law or social insurance already provide, what’s automatically included, and what comparable employers provide. Then ask the EOR to provide information as to what kind of supplements are available in that jurisdiction, either through the EOR or through insurers (tell them for this it doesn’t matter if the EOR can administer it, you just want to know what is available), how those supplements will be taxed (or even if they think a gross-up should be considered—beware of tax equalization), and now whether the EOR can administer it through payroll or insurance. We usually like to put the information in tabular or matrix form. This exercise generally reveals that some apparent disparities are justified or unavoidable. A US employee may receive expensive employer medical insurance, while an employee elsewhere has national healthcare plus a modest supplemental policy. The employer costs are different, but the employee protections may be reasonably comparable from an overall perspective. One legal biggie--avoid providing the employees some kind of enforceable promise of “equal” or “equivalent” benefits unless the client itself has specifically defined, with advice of counsel, how equivalence will be measured. Here is some language pulled just now from GitLab’s employee Benefit “handbook” online that illustrates their philosophy https://handbook.gitlab.com/handbook/total-rewards/benefits/general-and-entity-benefits/ Global Baseline & Local Nuance: GitLab’s goal is to provide a baseline of benefits for all team members globally... However, because benefits are highly dependent on local laws, statutory requirements, and market standards, specific plans and offerings will vary significantly by country. EOR & PEO Alignment: For team members employed through our professional employer organizations (PEOs) or Employers of Record (EOR), benefits are primarily administered through the local employing entity's statutory and sponsored plans. GitLab reviews these programs to ensure they align with our global standards, but they are governed by local provider agreements. Supplemental Coverage: Where local statutory programs or EOR options fall short of our global philosophy, GitLab may offer company-sponsored supplemental allowances or stipends (such as wellness or remote-work allowances) to harmonize the team member experience, subject to local tax compliance.

The W-2 year does not automatically determine the Form 5330 year. The key for §4975 is when did the PT begin? Under the rules it begins when the withheld deferral became plan assets—i.e., when is the earliest date the amount could reasonably have been segregated from the employer’s assets. The critical factual issue is the actual payroll/pay date for the 12/31 compensation. 2510.3-102 adds that, for withheld wages, the small-plan SH is the date the amount “would otherwise have been payable to the participant in cash.” Your facts: 12/31/2025: Comp is treated as 2025 compensation; reported on the 2025 W-2. 1/5/2026: check is actually cut, employer's regular annual practice. ~6 months later: deferral and lost earnings are deposited. If the normal payroll records show that the owner’s paycheck was actually payable on 1/5, and the deduction/withholding did not occur until 1/5payroll, then there is a reasonable position that the PT began in January of the following year. Look at constructive receipt here also…. i.e., confirm, owner had no right to receive net pay before 1/5. In that case, very good argument that the late deposit would be reported only on the following year’s 5330, even though the deferral is treated as attributable to the prior year for 401(k)/W-2 purposes. But, if the payroll records show pay period ends 12/31 and 12/31 is the pay date, and 1/5 merely is the date the physical check was printed or delivered, perhaps the safer conclusion is that the PT began in December (also when/if Q4 2025 Form 941 treats the wages and withholding as being paid in December). The 1/5 merely looks administrative. Note if it did occur in December and remained uncorrected into the next year, then there’s a §4975 transaction in both years. RR 2006-38. Bottom line: your “next-year-only Form 5330” theory is viable if 1/5 is genuinely the payroll/payment date. If 12/31 is the actual payroll date, don’t push it. Also, the fact that this is an owner-only plan helps some, but doesn’t drive the 5330 analysis unless the owner is self-employed rather than a W-2 employee of what I assume is a corporation. As noted by @Peter Gulia the owner only plan is generally outside Title I of ERISA because the owner is not treated as an employee for that purpose. But that doesn’t make 4975 disappear because the regs say its plan asset rule applies for 4975 as well as ERISA. So go back to the rule above. The Pub 560 rule allowing owner deferrals elected by year end to be contributed by tax filing deadline, including extensions, seems potentially significant but here they’re receiving W-2 comp not self-employment income as a partner or sole proprietor so, conservatively, we advise caution trying to use this rule.

Why don't they sign the participation agreements? What's the downside of just requesting it so there is no issue. As to @Paul I, based on the facts presented this would not be a conventional controlled group but likely is an affiliated service group with each PSC as an A Org and the Physic Corp the FSO under 414m. Otherwise, this could be a multiple employer plan, in which case, confirmation that the document permits non-controlled group/affiliated service group members to participate.

That's 9 years ago...so this might not work. In this situation on two occasions I can recall, we had an officer who was around at the time of the amendment sign an affidavit attesting that they knew that the amendment was signed timely and also certify that the board had approved the amendment and that they knew of no reason why the board approval would no longer be effective. The Service accepted the affidavit.