"How are plans typically set-up with regards to employee deferrals and matching contributions once someone hits the 401(a)(17) limit? I believe most plans will still allow contributions once the limit has been reached (I've only seen one that stops contributions), but curious to know how matching contributions are handled once the comp limit has been reached.

"Do plans have an option to match once the 401(a)(17) limit is reached or must they stop matching? If stopping is a requirement, what section of the law/code dictates that it must stop? Also, if matching dollars must stop at the limit, won't a plan with a true-up negate some of the negative impact a high earner might experience. For example, a plan that matches 100% of contributions up to 6%, wouldn't that provide up to $21,000 in matching contributions in catch-up? So maybe the impact would be the timing of when an employee potentially receives the match?"

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"The plan has a total of 14 eligible participants, comprising 4 Highly Compensated Employees (HCEs) and 10 Non-Highly Compensated Employees (NHCEs). It uses statutory eligibility and includes both Safe Harbor Matching and Profit Sharing under a new comparability formula. The client has elected to provide a Profit Sharing contribution of 5.6% to all HCEs and 1.86% to only 4 NHCEs. Using ASC software, we performed cross-testing under the Annual Accrual method with Permitted Disparity.

"Based on the plan design and testing methodology, it is our understanding that the plan is not subject to the Gateway minimum contribution requirement because only Profit Sharing no other nonelective contribution. Accordingly, we have overridden the status of the remaining 6 NHCEs to 'N/A' to facilitate passing the nondiscrimination tests. Both the Average Benefit Percentage Test and the Rate Group Test have passed.

"However, during the Coverage Test for Profit Sharing, the plan initially failed due to an NHCE ratio of 40% (4 out of 10 NHCEs receiving contributions). In cross testing, concentration ratio was calculated at 71%, with the Safe Harbor threshold at 41.75%, Non-Safe Harbor at 31.75%, and the midpoint at 36.75%. Since the coverage ratio fell below the Safe Harbor threshold, the plan failed through Average Benefit Percentage Test. To ensure the plan passes the coverage test under the Average Benefit Test, I allocated a nominal $1 Profit Sharing contribution to one additional NHCE, thereby treating them as benefiting under the plan. This increased the NHCE benefiting count from 4 to 5, raising the coverage ratio to 50%. Since the Safe Harbor threshold is 41.25%, the plan is deemed to pass the coverage test.

"However, I'm uncertain whether allocating just $1 is sufficient for compliance purposes, or if I should have applied the same 1.86% contribution that was provided to the other NHCEs. The client has clearly stated they do not wish to increase contributions or modify the existing allocation structure. I've proceeded with the $1 allocation to meet the testing requirement, but I'm posting this for feedback -- would appreciate any insights on whether this approach is acceptable under current compliance standards."

"Is anyone familiar with a 3(16) service agreement and what is typical language for indemnification? We are reviewing a contract for a potential 3(16) for our client. For example, I have seen one agreement refer to the indemnification of fiduciaries in the basic plan document and another one that limits liability to the fees collected from the Employer in the prior 36 months preceding the date of the error, which would equate to a total of $18,000.Thank you for any insight."