Combo plan, CB deposit complete by DC component will not be completed by 10/15

[Jakyasar]

This is a situation I have never encountered before in all these years (too many of them) and the client just dumped it on me today.

CB/DC combo.

CB funded by 9/15.

DC SH and PS will not be done by 10/15 but by 12/31. PS portion is also towards gateway and top heavy- standard.

2 questions:

• Is this approach kosher?
• What if they do not complete by 12/31? Top heavy, SH and gateway for 2025 is not satisfied

Any other issues I am not anticipating?

Thanks

[FORMER ESQ.]

Assuming the employer has a 12/31 PYE and FYE and has filed a Federal income tax extension for 2025, then:

• Any amount not contributed by 10/15/2026 is not deductible for the 2025 tax year. 
• Any amount not contributed by 11/15/2026 is not an 415 annual addition for the 2025. The 415 part is where this gets tricky, I would be careful on this.
• The SH contribution (assuming it is a SH NEC or SH Match with annual contribution) must be made by 12/31/2026. If not, you have a qualification failure that must be fixed under EPCRS. 
• The Gateway and TH contributions (and PS contribution in general) must technically be "allocated." I don't think there is an actual contribution deadline for these contributions (like there is for the SH). Of course, this is an academic point because not making the contribution that has been "allocated" constitutes an operational failure that must be corrected. Also, the real enforcement mechanisms to ensure timely contribution are the 404 deduction/ 415 annual addition rules.

 

 

 

 

[Jakyasar]

Thank you for the response.

First 2 is not an issue as they do not care about the deduction and there is no 415 limit, nowhere near. Thankfully I forced them to freeze the CB plan early in 2026 once I smelled the problem. So the deduction shift to 2026 will not be an issue.

Aware of item 3.

As for item 4, allocation and making the contribution towards that allocation is where I am quite concerned with this particular client especially meeting the gateway and top heavy requirements for 2025. I was hoping that they would finalize the contribution by 10/15 but looks like they will not do it which makes me very nervous for complience.

As I said before, never ever had to deal with this in forever.