Jump to content
Sign in to follow this  
Belgarath

Any limits on percentage of participants?

Recommended Posts

I don't work with these plans. Say a business has 500 employees, of which (pick a number - let's say 90) are highly compensated - say a giant medical practice, or a corrupt political campaign organization... Are these plans limited to a "select group of management or highly compensated employees" similar to a 457 plan, or are there no limits on who/how many can be covered?

Please don't waste any time on this, as it is a quick general question. If it requires any research, PLEASE don't bother!! Thanks.

Share this post


Link to post
Share on other sites

Without doing any research ...

generally covering 1% - 5% of employees falls under the definition of select group of mgt/hces with a greater percentage of coverage allowed for small employers.  20% is generally considered too much.  You have to analyze the facts and circumstances on a case-by-case basis.

Share this post


Link to post
Share on other sites

Keep in mind that the consequences are severe if the irs thinks you included somebody you should not have. 

Share this post


Link to post
Share on other sites

If you are talking about the "top hat" plan definition, it's only relevant if the NQDC plan is structured in such a fashion that is a "pension plan" as defined in ERISA.  It may not be, in which case the point is moot.  Second, and admittedly it is a technical point,  but the "top hat" issue is something over which the DOL could give you a headache, but not the IRS.  

Share this post


Link to post
Share on other sites

I'd also say that the

23 hours ago, Belgarath said:

Are these plans limited to a "select group of management or highly compensated employees" similar to a 457 plan, or are there no limits on who/how many can be covered?

Same "select group of management of highly compensated employees" language applies.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...