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I am curious why do they want to allocate the dividends on comp? To me it make as much sense as saying in a balance forward PSP let's allocate all the earnings on the investments on comp instead of balances. I can't cite anything one way or another but I am not sure I have seen ALLOCATED dividends done this way. I have seen crazy things with unallocated dividends. The only real question I would have is this causes everyone's stock to have a different dividend rate. ESOPs are supposed to have stock that gets the same dividend rate as any outside shareholders. This would be true in the aggregate but not true by person and that makes me uncomfortable at a minimum.

Yes, I agree with Belgarath. The last paragraph of my last post was in response to My 2 Cents, who asked a question while I was typing. These employees are eligible under the terms of the plan and according to the client, their employment agreement says they can not participate in the plan. I see that as a restriction on the amount they can defer, which means the safe harbor match requirement is not satisfied. I also see giving the choice between plan benefits and compensation as being a problem, since it would fit the definition of a CODA.

I read Kevin and Belgarath to be agreeing and saying the same thing in different words. I read Kevin to be saying that since they are already eligible to participate, you can't exclude them from deferring for fear of losing safe harbor status because of their employment agreement. I think it's understood that you can exclude class(es) of employee(s) and still have a safe harbor plan. You just have to pass coverage.

Terms of the employment contract do not alter terms of the plan document.

The client should be advised to bite the bullet and tell these folks - immediately - that they have to be eligible for 2017 and if they become entitled to a match the client will pay it. The client can then think about 2018 and thereafter and if it works to amend the plan to exclude them you could do that, if it doesn't work then they will need to renegotiate the employment agreements.

Section 318 makes it clear that a spouse of an HCE (because of ownership), is also an HCE due to attribution. A spouse of an HCE who is not owner (compensation test) is not an HCE unless the spouse also happens to satisfy the compensation test. So you could have a non-HCE spouse of an HCE. Without aggregation, under what mechanism is the spouse of a non-owner HCE also an HCE (Assuming the spouse does not also satisfy the compensation test)?

Somewhere along the line, I got the impression that the spouse's of HCEs are always considered HCEs themselves. I could be wrong, though.

In our office we mail the 5330 to the client and instruct them to mail it in with their check. We sign as preparer and they sign as plan sponsor. Hope that helps!

That, and a whole lot of years in this industry having seen just about everything with an economic incentive to an ERISA advisor or consultant run up the flagpole. And enough investment advisors would jump all over the concept that if it had any legs at all would be common practice by now. There is strength in numbers. I have some sympathy for clients that find themselves sold a bill of goods by practitioners that promise what many in the industry would run away from. Having spouse's labeled participants (in the absence of a QDRO) strikes me as a hard slog and precious little strength (i.e., no numbers).