"I have an employer from a small company who didn't withhold any 401k deferral and match for a large bonus paid to employees. Employees missed out on a few thousand dollars in match, as well as deferral. Question: Can an employer go off a verbal consent to not withhold money from this pay? (Their deferral forms don't have an election for bonuses, thus all pay would include an ee's deferral election) Solution: A 50% QNEC for missed deferral (plus earnings), and a 100% QMAC based on missed deferral (plus earnings)?"

"I have a gov't client that under withheld employee deductions for a 457 and 414h plan in 3 prior years. The employee's retirement system received all the correct funds at the correct times but what was under withheld came from the agencies funds instead of the employee's deductions. When the employees payback the deductions to the agency, how is this handled for tax purposes?"

"Our client, a multiemployer 401(k) profit sharing plan (Plan A) is contemplating a merger with another multiemployer 401(k) plan (Plan B). Under Plan A, legal services have been provided to and invoiced by the firm providing them. However, the firm has foregone any efforts to enforce their collection. Isn't the law firm's forbearance in collecting its billed fees an extension of credit and therefore a prohibited transaction? If so, is there an applicable class exemption that might exempt it from constituting a prohibited transaction?"

"My divorce decree states that ex-wife will receive XX dollars -- plus investment experience (earnings, gains and losses) on such amount based upon investment performance from the Plan valuation date immediately preceding the date of the parties' Judgment of Absolute Divorce until the Plan valuation date immediately preceding the date of distribution. My ex-wife never submitted a QDRO. It's been 7 years. How are earnings, gains and losses calculated? who would do that? does she have a time limit to submit the QDRO?"

"Have client with a matching formula that states: On a payroll basis, you get 6% match if you contribute 2% or more. If you contribute less than 2%, no match. (Long history behind how this formula came about.) Obviously most participants contribute 2% or more. Recently the plan was amended to also require that a true-up be made at year end based on annualized wages / deferrals. This was generally to help those who front-loaded their salary deferral contributions.

"However, based on this formula, what do you do in the case of a participant, who has been eligible for years but not contributing, suddenly starts contributing mid-year at 2% -- getting the 6% match each payroll period. When you annualize the formula, this participant's deferral percentage will be less than 2%. This means he is NOT eligible for any match for the year per the formula. I don't think this was the intent when they elected the true-up option. If the formula was dollar for dollar up to 6%, I don't think it would present a problem. 

"I think the client will want to do whatever is the easiest to administer which I believe would be to eliminate the true-up option (and tell participants to not front-load their contributions) -- assuming they stick to the formula as is. Taking money out of the participants account is rarely the desired outcome if preventable. 

"Question: Can you apply the 'true-up' feature only in situations where you are adding funds, not taking away funds (regardless of HCE / NHCE status)? Although that initially strikes me as problematic -- not operating in accordance with the terms of your plan. I do think that most participants who would fall into this situation would more than likely be NHCEs. I think we in the industry generally view the true-up feature as a situation where the employer is always ADDING additional contributions to a participant's account by the employer."

"I see this code applies to 414(m) which relates to affiliated service groups. So 3H must be used for an ASG. It's just odd that the instructions description mention 'controlled group' but not ASG by name. So 3H applies for an ASG. No need to comment unless someone thinks I'm wrong. Thanks"

"Employee enters the CB Plan on 1/1/2021. Plan requires 1,000 hours to earn a Pay Credit. Works 1,100 hours in 2021, 1,100 hours in 2022, 900 hours in 2023 and 900 hours in 2024. 12/31/2024 accrued benefit is $100/month, his average comp is $60,000. I think he would pass the 401(a)(26) on accrued-to-date method. The system (Datair) calculates his accrual rate correctly but marks him as 'non-benefiting'. What am I missing here?"