"A current safe harbor plan provides for an enhanced safe harbor match of 4% and use a payroll computation period. Sponsor wants to increase it this year to 5%. What are the mid year requirements? 30 day notice, the increase must be retroactive to 1/1/26, can the plan do a true up match retro to 1/1 and then continue with the payroll match going forward, or does the match computation period have to change to annual for the remainder of the 2026 plan year?"

"We have an owner only plan that recently went through a Department of Labor and Employment Unemployment Insurance Employer Services Audit in 2025. The audit was for 2023. It was determined that the 1 Independent Contractor was actually an employee. The client paid the necessary taxes and began treating them as an employee for the remainder of 2025. So for 2025, the Independent Contractor turned employee received both a 1099 and a W-[2] Is it reasonable for the client to list the employee's hire date as the audit close date since this is when the employee began receiving W-2 wages?"

"Plan is intended to be a safe harbor plan. It defines compensation to exclude bonuses. Most of the time, we would assume this is acceptable under 414(s), because bonuses are typically received disproportionately by HCEs. But due to unusual circumstances, this turned out not to be true for 2025, a fact which they discovered only after 2025 ended.

"My assumption is that this eliminates safe harbor status for 2025, and that they must now run ADP tests and take the normal steps to correct. But is this correct? 'Dropping safe harbor status' is supposed to be prohibited mid-year, but would this be considered dropping safe harbor status or never having had it? And if this would be considered an impermissible dropping of safe harbor status, what would the correction be, anyway?

"Also, what happens for 2026? Are they precluded from making changes for 2026 on the theory that it is a safe harbor plan for 2026 unless the compensation definition also proves to be discriminatory in 2026? In particular, can they remove a top paid group election from the plan and/or change the definition of compensation for 2026?"