"A normal 50 sole proprietor client in 2025 who is the sole participant of a 401(k) plan. Client is not participating/deferring in any other plans. Below is how we calculated the contribution breakdown for 2025, to simplify the numbers we are using $23,500 as the net Schedule C income after SE taxes:

• 25% PS contribution: $4,700
• Deferral: $14,100
• Catch-up: $4,700
• Total contribution is $23,500 and the earned income for the plan is $18,800

Question: So the net maximum contribution is no different than had the participant made $23,500 401(k) and no employer contribution. Do you agree the maximum total deductible contribution for this owner is $23,500?"

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"While calculating the annual true-up match, a safe harbor 401(k) plan recently determined that the value of the imputed income for non-cash fringe benefits was incorrectly included in Eligible Compensation when calculating employer matching contributions during 2025. These amounts should have been excluded from compensation according to the plan document. The amount of the employer matching contributions attributable to the error (let's call them 'excess matching amounts') for an individual participant ranges from $20-$80. My interpretation of IRS ECPRS rules is that these are Excess Amounts under Section 5.01(3)(a) and do not need to be forfeited under Section 6.02(5)(e) if the Excess Amount is under $250 for an individual participant. But we are getting significant pushback from the recordkeeper who is insisting that negative adjustments must be made to participant accounts to remove the excess matching amounts.... Is my interpretation incorrect? ...

"If you agree the excess matching amounts are Excess Amounts that do not need to be forfeited because they are under $250, and the plan sponsor chooses not to forfeit the amounts, is there any impact on the plan's safe harbor status? Does it matter if only HCEs received these amounts?"