"While I am aware that in order to permissively aggregate 401(k) plans that must have the same plan year, same HCE definition and use same testing methods for ADP/ACP, what I am wondering is if anyone has experience in 401(k) plans with different plan years (one runs on a CY basis and the other is a 6/30). How is the coverage tested -- as a snap shot at each plan year end? Of course, we found out well beyond the transition period. And, am referring to outside counsel but for my own edification was curious as to others experience? Like, assuming it fails -- how do they correct coverage with QNECs?"

[Sponsored]

Experience optimal retirement plan administration. Enhance efficiency, accuracy, and savings -- focus on people, not paperwork.

"I'm doing testing right now and a plan of ours fails the top-heavy test. Normally, my understanding is that the correction is a 3% employer contribution to all employees eligible for salary deferrals. However, I've run into an interesting scenario: This plan is not a safe harbor plan, and they don't allow salary deferrals at all under the plan document, it's only profit sharing, with eligibility of 1 year and 21. It's pro-rata. Essentially, everyone who is eligible for for profit sharing (and therefore the plan as a whole technically) has gotten a 3% employer contribution. Do they need to make a corrective 3% contribution to the employees not eligible for profit sharing?"

"I have always thought that gross compensation for contribution calculations would be Box 5 of the W-2... Medicare Wages. Med taxes are on your gross wages. Box 1 would be less if a pre-tax deferral was taken, but we want gross wages earned so Box 5 would be the number to use. What box would be used to calculate a SH Match contribution?"

"Client has a 10% automatic enrollment feature, and the trustee wants to reduce the automatic enrollment rate to 5% and add an automatic escalation feature with 30 day notice now. Can they amend now or do they need to wait until 1/1/26? Plan is a calendar year Plan and no new hires at this time."

"Control group A & B has a PSP with individual allocation groups. I know that if AB files consolidated tax return that the 25% deduction limit is applied to eligible payroll for the CG, and if separate returns I believe the 25% is applied separately to each. Assuming that, my question concerns the situation where the owner (both A & B are S-corps) gets a much smaller W2 from A than B but still gets maximum PS in total. There is an NHCE in A that requires a large contribution such that the total PS for A would exceed 25% of A's payroll if the owner's total PS% was applied to each of his W2s (equally pro-rated). My question is, can A say the owner's PS is 5% of pay while B determines the owner will get 40% of pay? That is, skewing the owner's PS toward the company with the higher payroll so that each company's deduction does not exceed 25%. I think that is OK, but looking for additional expert opinions."

"We have a 457f Plan. A participant recently received distribution of the vested portion of his account. $0.02 was mistakenly not distributed. What are our options for this? Distributing would be cost prohibitive. Our plan document does not discuss de minimis amounts. The plan does have constant 3 year vesting cycles. So this participant will be due another distribution next year. But I don't see how we can add this to his account balance that will vest next year. Can we just forfeit this amount as a de minimis amount?"

"Closely held company. PSP Trustee, who is also the key person in company and a participant in plan, purchases universal individual life insurance policy naming plan as owner and beneficiary. For unknown reasons, annual premiums for policy charged to Trustee's individual account. Thoughts on plan self-correcting by crediting him the premiums paid with interest?"

"Client maintains safe harbor 401k profit sharing plan. Participant's first wife died. New Beneficiary designations were completed, naming his children as beneficiaries. The participant also has IRA's, which has his children as named beneficiaries. Participant recently remarried. Pre-nup agreements were prepared, agreeing that she does not have any rights to his retirement plan or IRA's. Would the new wife automatically become beneficiary of his retirement plan upon being married 1 year, unless the participant obtains a spousal waiver? Is a spouse the automatic beneficiary of his IRA's as well?"