"Question regarding and ADP Test Failure. We have a failed ADP Test for a client with 4 HCE: 2 HCE are under 50, and not eligible for a Catch-up 1 HCE maxed out his contributions ($27k), so therefore we are already ignoring the $6,500 catch-up in the ADP Testing 1 HCE, who is over 50, contributed $13,000 for 2022 Can we 're-classify' $6,500 of the HCEs 401(k) to a catch-up, thus excluded them from the test? If we test this HCE with $6,500, we will pass the testing so I just wanted to confirm. Thanks in advance!"

"Sec. 102 uses the language "Tax Credit." I am getting questions about its application to 403(b). I think, unfortunately, that it cannot be applied as nonprofits do not pay income taxes, but I am reading about the application of the Health Care Tax Credit to nonprofit employers via the FICA tax and also an IRS article on filing a 990-T to claim the credit (again, Health Care at the time of this IRS article). I am beginning to think that the application of this Sec 102 to nonprofits will require further input by the IRS. Any thoughts or comments?"

"At least the problem was discovered very early on....... This is a new start up solo 401k plan eff 1/1/23, only 2 months ago. The owner is a sole prop. While his compensation to be used for the plan was supposed to come from his sole prop business, a miscommunication somewhere resulted in him believing he could use income from other sources that would not be eligible for use in the plan. He already made a few deposits in 2023 (not sure whether they were to be 401k, roth or after-tax). But at this point, all parties involved just want to "walk away from the plan". IE, take the money back out of the plan account and pretend it never happened. Given that he is the only participant and there have been no government filings, is this acceptable or is there a better way to handle this? What about earnings in the account? If there is no tax deduction being used for any of the deposits, I would assume any earnings that were associated with the deposits would just be non-retirement earnings, just like it came from savings account or something similar. Any comments are appreciated."

"We administer a combination 401k/new comp PS/ cash balance DB (non- PBGC) Accountant telling me another client sponsors same type of plan design, but his client is also doubling the max by contributing non-deductible as well. Unless I'm missing something here, aren't the non-deductible contributions considered Roth and therefore excess contributions??"

"RP 2021-30, Appendix B, .07(4) provides a correction for early inclusion of an 'otherwise eligible' employee. What about an employee (NHCE) in an excluded classification who was mistakenly allowed to defer, and received employer safe harbor nonelective contributions? Since EPCRS provides certain pre-approved fixes, but those fixes are not the exclusive methods of correction, do you think this fix (retroactive amendment) would be acceptable, to allow this person to participate? Or, must the deferrals plus interest be refunded to the participant, with the employer contributions being forfeited as an excess allocation, and used accordingly? Other thoughts? Have not ever seen this particular situation that I recall. It seems 'reasonable' to me to permit the amendment to remove this person from the excluded classification, but might be risky. Wouldn't even consider if it was a HCE."

"A 401(k) Plan defines compensation as participating compensation based on the entry date of the participant. When there are multiple eligibility periods and entry dates for the various contribution types, (deferrals, Safe Harbor Non Elective and Non Safe Harbor Non Elective), for purposes of the Gateway test, which participating compensation is used for 414(s)?"

"Hi, An MP Plan, owner only, terminated 22 years ago. The owner (plan sponsor and only participant) now received from unclaimed funds, a check made out to the 'xyz corporation mny purch' (plan sponsor) for $200,000. There is no plan account anymore. To facilitate a non taxable rollover of this money purchase check to the IRA of the owner, can the check be deposited into the Corp account AND then within 60 days be transferred into the owner's IRA? Similar to a plan distribution that was deposited into the personal account of a participant, that can be transferred to an IRA within 60 days to be a non taxable distribution?"

"We think Relius is telling us their system will be off line this weekend? Can someone please tell me this is not the case? The timing clearly could not possibly be any worse."