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Guest lskin
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Guest lskin

Can you make Davis Bacon contributions to a SEP plan? If so how would the contributions be calculated? If the SEP has a flat dollar formula and you gave the Davis Bacon contributions would you give the employees who are not working on a public works project the same dollar amount?

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I do not know and have not seen it done but that could be because an employer doing this would not be readily visible.

I do not think that a SEP would normally have the no vesting, non forfeiture and other features required of plans used for DBRA. But that does not mean that it could not.

I suggest that you contact any of the TPAs that handle large numbers of DBRA plans and see if they have such a SEP and if not Why not?

Why are you making a connection between employees on DBRA projects and employees who are not? They cannot/ should not be in the same plan, would not be working on the same projects and also do not have the same payscale etc etc, So why the connection?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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If a SEP covers Davis Bacon employees, then non DB employees of the same employer must also participate, if they're otherwise eligible.

All SEP contributions are immediately fully vested.

SEP contributions must "bear a uniform relationship to total compensation", except section 408(l) permitted disparity is allowable. So when you say the ctbn is a flat dollar amount, would an example be $8 per hour, with the possibility that different employees earn pay at differing hourly rates? If yes, that violates the uniformity language. I did see nonuniform flat rate ctbns discussed (BNA portfolio?) where the author suggested this is permissible, basically since it's reverse discrimination. I wouln't count on that one without some more substantive cite, which I don't have. My conclusion is that you'd need to stick with prorata allocation---ie everyone gets the same percentage of pay.

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Guest lskin

The SEP document I have says that the same dollar amount can be given to all employees. So if the prevailing wage benefit is $3 a hour and they figure this to be $5,800 a year to full time Davis Bacon employees can they not give the same $5,800 to the employees not covered by Davis Bacon?

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The employer MUST include the non Davis Bacon employees.

Exactly how does the plan document describe the contribution rate/allocation? Hopefully, it provides for or will be amended to provide for contributions to eligible employees based on hours worked, with a $5,800 cap. If eligible employees were each given $5,800, this could exceed 100% of pay for some people and would also conflict with the deduction limit of 25% per person.

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