"A prospective client wants to adopt 401K/PS/Cash Balance combo for the 2024 plan year. However, they already made the SEP contributions for the 2024 plan year. Is it possible for them to adopt the combo strategy? If so, how does the NDT work with the SEP contributions? Where can I find more information on this?"

[Sponsored]

Ferenczy Benefits Law Center presents the Pensions on Peachtree (POP) Conference on April 24-25, 2025, in vibrant, Atlanta, GA. Connect with industry leaders & peers in a collaborative & engaging environment. Limited Spaces – Register Now!

"The NHCE elected to make a $5,000 Roth deferral. Pay was not reduced and no deferral (Roth or pre-tax) was made at all. The only EPCRS correction I see is for the employer to make a 40% pretax contribution, with earnings, to a QNEC. The employer and employee would like to do more. [1] contribute the 40%, with earnings, to an employee Roth account [2] and amend the 2024 W-2 to include the 40% with earnings. The IRS website (not EPCRS) allows retroactive characterization if a deferral had been made but incorrectly designated as non-Roth. However, I don't see anything in EPCRS that would allow this for an employer QNEC. I'm inclined to tell the client to act in good faith but it would be nice to know if there is more creative guidance for this issue than making a 40% pre-tax QNEC."

"Participant in a non-governmental 457(b) plan incurred a severance from employment and elected to defer distribution of his account (as allowed under the plan document). The participant was subsequently rehired a few weeks later and continued his participation in the plan. When the deferred distribution date arrived (2 years later) the recordkeeper failed to segregate the participant's contributions (based on first period of employment and second period of employment) and distributed his entire account, including deferrals made after he was rehired. Participant is still employed. Was the participant entitled to receive the distribution of his account attributable to deferrals in his first period of employment (because he did have a severance from employment and elected a deferred distribution date)? If so, can we treat the distribution of the deferrals made during his subsequent re-employment as an "overpayment" and apply the correction method for overpayments in EPCRS to correct (knowing that 457(b) plans are not included in EPCRS)?"

"If a 401k plan is terminating for example as of 5/31/25, all account balances are required to become 100% vested. But when do the remaining forfeitures have to be reallocated -- is it as of 5/31 or can forfeitures remain after this date to pay expenses such as mailing fees, etc. It seems like they should go to participant accounts as of the termination date?"

"Will the compensation threshold of $145,000 be increased? In other words, do we know what the indexed amount will be at that date or will it be $145,000 and indexed moving forward after 1/1/2026."

"Let's say a plan merges (into a PEP) on October 2, 2024. But the assets aren't liquidated until October 12, and not actually 'transferred' until 3 days later -- October 15.. Now, my understanding has always been that the technical 'last day' of the plan year is the effective date of the merger agreement. That is (arguably, depending upon who you are dealing with) the day that the assets 'belong' to the new plan, even though the technical transfer doesn't take place until somewhat later. But the auditor wants to see the date of the 'final' as being the date of the physical transfer of the fund, therefore showing a balance of zero as of (in this example) October 15th. Is there really any problem with just showing the final date of the form as October 15th? Seems like it'll keep everyone happy and have no real effect on anything?"