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Bill, this is [[[Generally]]] my take, but each case is different There are situations where HCEs should be limited around the beginning of the year from Maximizing their deferrals (e.g. deferring $18,000 on the first $25,000 in salary). In few instances, a couple of those HCEs may end up deferring $3,000 on the first $4,000 in salary and then leaving the company in January. Mathematically, you'd have $6000 in deferrals that sent two 75% deferral rates for HCEs in the ADP test; and the failures will cause those who deferred at $18,000 to receive distributions. I just say this to re-emphasize that each case is different. So, the demographics of the employees should be studied and the clients should be made aware of the different possibilities and then counseled into avoiding these types of pit falls. But, I do agree that most of the time it's not worth it. It does get challenging when you have HCEs who have low Compensation during the year but high (percentage of salary) deferrals. Good Luck!

But then he may incur tax issues if he has pre-tax IRAs. Instead he can do an in-plan Roth conversion if the plan document permits and avoid those tax consequences.

From IRC 414(p)(8): 414(p)(8) ALTERNATE PAYEE DEFINED. --The term "alternate payee" means any spouse, former spouse, child or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant. Could you please explain the significance of the bolded language in your post. Its a mystery to me. And could you also answer this question. 42 USC 666(b)(6)© provides that states enacting legislation requiring payment of back child support to a state agency under 42 USC 666(a) must hold the employer liable for amounts which the employer fails to withhold from the income due the employee following receipt of notice from the state agency. Since 42 USC 666 is a federal law state laws enacted to comply with its mandates are not preempted by ERISA (42 USC 666©(3)); therefore if a plan fails to withhold child support from an employee's pension because the state agency is not an alternate payee under IRC 414(p)(8) will the employer will be requiired to pay such amount to the state agency?