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One of our clients calculates how much their people are missing for this reason and contributes that to the nonqualified plan on their behalf.

" Isn't it great to not have to actually know or remember anything anymore?" I never knew or remembered anything anyway, so it isn't a change for me...

I've seen experiences similar to some possible reactions austin3515 alludes to: An employer includes for an unfunded plan's select-group employees some who have (unreduced) compensation less than the 401(a)(17) limit. One of those employees makes a salary-reduction deferral under the unfunded plan, and expresses surprise when he discovers that reducing his salary lost him a portion of a nonelective contribution to a funded plan. In the experiences I've seen, the TPA was in a position to prove that plain-language descriptions, for both plans, explained how the deferral under the unfunded plan affects the contribution under the funded plan. But the complaining participant diffidently asserts that someone should have explained the point orally; 'don't you know I'm too busy to read anything?' An employer can diminish this kind of problem by providing a continuation of the nonelective contribution under the unfunded plan.

Most plans I worked on in the past made up any shortchange from the 401k plan into the NQDC plan.

Isn't that the kind of policy where the participant can buy the policy from the plan by paying the plan the policy's cash value? This is not normal insurance - if the participant dies, the money does not go to the participant's beneficiary but to the plan (think "key man insurance", if that term is still being used; probably should have been changed to "key employee insurance" by now). The plan, by setting the policy up so the plan itself receives any proceeds, owns the policy lock, stock and barrel. It does not appear that the policy exists for the benefit of the employee. I agree that there is an additional option to what I cited - buying the policy. I almost went into a discussion about the possibility of it being key man life insurance, because of the way the question was posed, but since that would be rare, thought I wouldn't go there. It is a (remote) possibility. But if a participant has a policy in a plan, it is properly set up with the plan as owner as beneficiary, even if it is strictly for that participant (or beneficiaries of the participant).

actually, the best I ever heard from a client was "I defer the max I can, anything that gets returned implies I have indeed put in the absolute max I could into the plan after the refund" - a great client who didn't grumble about refunds. of course, that works for the owner, but the other HCEs may suffer. also, this assumes testing was done timely and there is no 10% fee. agree with Belgarath's comment. in addition, by the time the prior year test is run, and you pass the info onto the client there could already be 3 months of deferral. at that point if you tell someone you can only defer 5% to pass and they have deferred 10% for 3 months it is hard to explain what really needs to be done.

So did Leonard Nimoy manage to live long and prosper? I would say "yes".

Why would he be mad at you? And, sorry, but I don't believe he would have done anything differently had he known in advance. Maybe he'd try to coax his employer into paying him the $150 they were saving on his SHNC, but that's about it. You can extrapolate using any numbers you wish, e.g., a $50,000 NQ deferral and a loss of $1,500 in SHNC, but I doubt he would have done anything differently.

Fraud? It may be hasty to use that (very strong) word. Mr. Green could argue that he did nothing wrong in asking if a QDRO had been filed, and the fault (if any) lies with ex-Mrs. Green for failing to obtain a valid QDRO. I suggest the most important pieces of advice above are found in Post #2 and #3. The rest is applesauce.

I say you can remove it. If you can't because someone might retire, then you couldn't ever because someone might work 1000 hours, or might be employed on the last day of the year. Are they entitled to anything on the day the amendment is adopted? That's what matters.