Basically

I have never given a client the option, but a financial advisor is asking the question... Can the plan sponsor decide year to year if their plan is a SH plan or not? and if so, how does this work? I know that to be a SH Match, for an existing plan they must decide prior to 1/1 of the new plan year... but a plan can switch mid year to a SH plan by 12/31 if they add a 3% NEC SH contribution (after 12/31 if the NEC is 4%). Ok, say they did that... that would be amending the plan which would mean the plan is now a SH NEC plan moving forward. To go back to a non-SH plan, well, another amendment switching the plan back? I'm getting dizzy just thinking of amending the plan each year. But.. is that how it is done? Or maybe I am totally off... you can't do this year to year.

Just looking for some clarification and confirmation... The Roth catchup requirement rule is that if you earned $150K of W2 income the previous year then your catchup deferrals must be Roth deferrals. Is there something that I can show a CPA clarifying reported K1 income? I googled and found someone saying the rule points strictly to W2 income.. Thanks

Yes... from all accounts.

I am always second guessing myself. A 62 YO who is still working wants to roll some of his plan money into an IRA. He is older than age 59-1/2. Plan is designed with 59-1/2 as the normal retirement age. No problem here ... right?

A client is looking to hire a top tier employee. The prospect has a counter offer. Plan eligibility is a problem. The competitor has immediate entry while my client has a 1 year service requirement. I was asked, can we change the eligibility to get this one new hire into the plan immediately and then change it back? And if technically it is ok do we have to wait a certain amount of time before we tweak the eligibility requirement again? I totally understand, if anyone else is hired during that time gets to enter based on the existing plan design. Is this playing games with eligibility frowned upon?

Absolutely!

Thanks for your input Paul. I have told my clients exactly what you have stated and honestly noone has questioned me.. until this one who didn't like that the letter had a due date for the 945 submission. I pressed to them that you only need to file the form when taxes are whithheld. Thanks again

I have always checked "yes" for this question because in the case when a terminated participant takes their payout in cash taxes need to be withheld. The letter the plan receives from the IRS assigning an EIN mentions filing a 945 which has intimidated a new plan sponsor. I reassured them that since no payouts have occurred resulting in federal withholding, a 945 is not required to be filed. I guess I am just looking to be reassured myself that I am doing this correctly... Yes? Thanks!

Yes... she has transferred ownership to him. She was aware that it needed to be done prior to her totally being unable to do so... mentally In fact, he is due to be married this summer and his wife-to-be is onboard that he and Grandma are a package deal.

My understanding is that he is looking to take a $6,000 distribution to cover legal expenses. He has already upgraded her furnace and other necessary repairs on her residence out of his own pocket. Should he present the plan trustee with an estimate for the legal fees?

A young plan participant wanted to take a loan from the plan. Unfortunately, the plan does not allow loans. He then asked if he could take a hardship dist. Yesterday I spoke to my contact at the business who explained the situation. This mid 30s guy was raised by his grandparents. His grandfather has since passed and now it is just he and his grandmother. Sadly, she has dementia (giving away her monthly SS check $, must be with someone 24/7). This young participant is in the process of legally obtaining conservatorship but as it stands right now, she is not his dependent. Does that matter? There certainly is a paper trail of him caring for her. Anyone see an issue here allowing a hardship dist? Thanks

I am a tiny TPA and handle small plans for small businesses and individuals. I moved from Datair to FTWilliam back when it first started... never looked back. Tim McCutcheon was patient with me which helped me dial in my TPA services. I also needed a better way to process distributions. Someone here mentioned Penchecks back in 2013 and again... never looked back.

One final question... This client is a single member business... they didn't bring this up until 4/10/2026. It's too late to file a 2025 1099-R with the IRS... isn't it? Or is there an exception when this happens? I just want to do this right... $4,100 excess contributed in 2025 came out in April of 2026 -> Prepare a 2025 Form 1099-R $95 -> Earnings that were taken out in April of 2026 -> Prepare a 2026 1099-R Prepare a 2025 1099-R and file it now. Give the participant their pieces of the form. Thanks

Thanks Paul.. so a 2025 1099-R still needs to be prepared. The fact that the excess deferral came out in 2026 doesn't play into needing to prepare a 2025 1099-R? As I wrote my question I thought since the funds came out after 2025 (in 2026) the 1099-R would corresspond with the year the money came out (2026).

A Solo 401(k) guy reached out to me. He deferred $4100 too much. He is pulling it out with earnings by 4/15. Does he get a 2025 1099-R for the return of the deferral or is one prepared for 2026 because it was take out in 2026? (hmmm... did I just answer my own question?)

Sorry for the slow response... THANKS!

I have a plan... all employees are HCEs (1 owner... everyone else earns megabucks). It's just a 401(k) plan.... none of the employees get an ER Cont One of the employees has asked about contributing a VAT contribution. Can this employee still max out 2025 to $70K ($23,500 deferral + $46,500 Voluntary) at this point? Or would any VAT Cont made now be for 2026?

Thank you. I have been talking to the CPA. If my memory is clear I think I basically passed along what you have described. I will follup with them. Thanks for chiming in! I certainly appreciate it!

This client owns a business and is going to open another business (both in the financial arena). I can use the same plan document for both plans... using the joinder agreement option... it's a control group. IF the client wants to max out the ER, does it matter which business ponies up the money? OR... if the client earns $100K from company A then company A needs to pony up $25K (and so on with Company B) Thanks

Thanks!

A single member business guy setup a plan (Solo) and rolled into the plan old pension money he had from when he worked somewhere else. He is telling me some of the money is Voluntary After Tax contribution money... not Roth deferrals. He took a distribution from the VAT money rolled into the plan. Do you treat VAT distributions the same way you treat Roth distributions?

THANKS! I did end up exploring more and saw that.

My apologies Ms. Baker... I'll keep my posting more professional Thanks Bill.... I'll do that. I went to the DFVC link and this is what it said... Sheesh... I guess I can't do anything right now

I can't believe this happenned! This client is very responsive and always gets to me the annual census, financial info, and once completed the 5500 signed so that we can file quickly. Unfortunately, for 2023 I just didn't hit the file button so the 5500 didn't get filed. 2024 has been filed. They received and sent to me the love letter from the IRS saying that they don't have record of receiveing the 5500 for 2023. So... Can I still do the DFVC? No penalty letter has been received. Is there no way to plead to the IRS to let it go? I can show a long history of better than timely filing I'm going to have to eat this one aren't I. People make mistakes... there was no ill intent... it was just missed. Give a small TPA a break! What's the best way to go about this??

Like a new comp?