Renee H

Thank you everyone for your excellent advice. I found out it is a stock sale and the plan will continue at least until the end of the year. I may pop in again on this topi when I know more details.

I found out yesterday the sale of my client's business is set to close escrow on September 30. They sponsor a 401k/PS plan with safe-harbor matching contributions. I am not privy to all of the details but here is what I do know: 1. Sale of the business is set to close on 9/30/26. 2. The sellers have not notified their employees of the pending sale. 3. The buyer sponsors a 401k plan with basic match only (no non-elective contribution). They do not wish to merge the sellers plan with theirs. 4. Assuming escrow will close on 9/30, all employees (approximately 40) will terminate employment and be given the option to work for the buyer's company. I do not know how much notice they will give them. I "assume" they will be given the option to roll their benefits to the new company's plan. 5. The sellers do not wish to apply for IRS approval of the plan termination. We use CalcAire's pre-approved documents. 6. The sellers wish to establish a termination date to coincide with the closing of escrow. I don't think they can do this based on notice timing requirements. What is the earliest date they can terminate the plan after close of escrow? Is the 60 day notice of intent to terminate still applicable under these circumstances? I recall reading 15 day notice is only required for DC plans but I am unable to cite where I read this. I will take all necessary steps to terminate the plan per IRS guidelines. I'm just not sure when to proceed since they do not know when escrow will close and there is the off chance the sale will fall through. Based on the limited amount of information I have available, how do some of you think this should play out? Thank you in advance.

Thank you. That is what they will do.

Participant is subject to the Roth catch-up mandate in 2026. He has an old Roth IRA that is not part of the 401k plan. Participants direct their own brokerage accounts. He is asking if he rolls the Roth IRA to the Plan, will this enable him to deposit the Roth catch-up into the Roth rollover account. He is trying to avoid setting up another brokerage account just for the Roth catch-up. Is there anything else he should be concerned about in this scenario?

Thank you for clarifying.

This is a profit sharing plan with spouse owners only. Both are subject to the RMD. Husband died January 2026. Wife is the primary beneficiary. The Plan requires the RMD in year of death be based on the deceased date of birth and the beneficiary's DOB in the following years. Does the wife have the option of waiving the 2026 RMD without penalty? If she is eligible to waive, will she be subject to both 2026 and 2027 in 2027? Due to the non-liquid nature of plan investments, I do not believe she will be able to roll the husbands benefit to an IRA at this time. Thank for your help.

Thank you all for your responses. I agree with Effen that the person who thinks it's a great idea is the person selling the policy! I am under the impression the policy will be used as a tool to absorb the assets. The plan is to surrender the policy in about 5 years (not sure why that number). The participants are relatively young at age 42 and current excess is around $500,000. The owner is a physician. They also have a 401k/PS plan. This was a takeover plan that we are trying to get cleaned up. I will discuss with my actuary to determine the best course of action. Thank you again for taking the time to give me your thoughts.

I am the TPA for a client with an over-funded cash balance plan. Husband and wife participants. Both age 42. His investment advisor is recommending that the plan purchase a life insurance policy. I recall a time when life insurance was a popular choice in DB plans but primarily to fund contributions. I no longer have any plans that contain a life insurance product and prefer to keep it that way. His plan will need to be amended to permit this. Since I am not current on the rules, I would love to hear from some of you experts who can give me an opinion on whether it makes sense to purchase one from an over-funded CB plan?

The document is not a OOPS document. I use Datair Defined Contribution Pre-Approved Base document #20. I could not find anywhere in the document that makes an exception for owner spouse service requirements. In this case, perhaps an amendment is the way to go. Do you agree?

I have seen this issue in another post, however, it did not specifically address an owner only 401k plan. The employer is a Sub-S Corp with no other employees. The plan requires 1 year of service, 1000 hours with duel entry dates. Is there an exception for the owner's spouse to enter the plan without satisfying the service requirement? Or should I amend the plan to eliminate the service requirement and then re-amend it back if and when he hires a new employee. He is considering a new hire in the next year or two.

Thank you everyone for your responses.

I recently inherited DB/401k combo plans. The company is an LLC and currently has only included the husband's partnership income for benefit purposes (wife has never participated). For 2025, they want to bring in the wife and daughter. Will this cause the DB plan to require PBGC coverage?

Thank you Bill.

Hello. I have a safe-harbor matching 401k plan where the employee satisfied his one year of employment on 11/3/24. The adoption agreement defines eligibility as 1 year of service with semi-annual entry dates of 1/1 and 7/1. This would enter him on 1-1-25. This created confusion with the plan sponsor and, evidently, the payroll company because they deducted a 401k contribution from his December paycheck. I am thinking they need to refund the $170 and issue an amended W-2 for 2024. Is my understanding correct, and if so, does anyone have a better recommendation? Does anyone know what may happen in an IRS audit if they choose to leave it there and not amend the plan to permit it? The deposit was made in January 2025. Thanks in advance for your help!

Thank you very much for your helpful responses. You guys are the best!