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Jim, a plan document may have a deferral cap as your wife's plan has AND a plan is not legally required to permit catch-up deferrals, but your wife's plan happens to allow. It's not a legal right, it is a "privilege" if you will, granted by the terms of the plan. BUT, the plan's record keeper and/or administrator are not following the Plan Document - that is your argument, not that they are doing something illegal.

Nope. How is it possible that your firm didn't give the client clear guidance on this issue?

Many times I see different SPD's provided to different populations - such as when different nonelective contributions are provided to different allocation groups. The provision should probably be addressed in the CB version though.

Does the 15% deferral limit apply to everyone? Or, just to Highly Compensated Employees? If it only applies to HCEs, it could be to help with their discrimination testing. If it applies to everyone, it is likely a hold-over from a long time ago. Internal Revenue Code Section 414(v) has the rules that allow catch-up contributions. It is not required, but I can't think of any reason why plans wouldn't want to allow it. Once catch-ups are allowed, the universal availability rule I cited becomes a qualification requirement.

Unfortunately, this is almost entirely cost related. Mega companies like ADP and others offer "low cost" plans staffed by people with zero experience and education in qualified plans. What you are facing is not an uncommon result. When you race to the bottom on fees, you end up at the bottom for quality.

It was either left over from a very, very long time ago when deferrals were included in an overall contribution % limit, or somebody just checked the wrong box. You are probably beginning to see that, while you might assume that everything in this field is done carefully and by experts, that's not the case. Looooong story short on this, you are right and they are wrong. The hard part is getting a company like ADP to concede that because they consider themselves to be the final authority and most people cave in. Probably going through your wife's employer is the best thing, but they are likely to simply rely on ADP for the "final" answer, so spell it all out like you did here with the SPD text etc etc, and I don't think anyone would mind including their responses as backup. Good luck!

https://www.gpo.gov/fdsys/pkg/CFR-2014-title26-vol5/pdf/CFR-2014-title26-vol5-sec1-414v-1.pdf Try this. Section (e) starts at the bottom of page 1004 (4th page of the pdf) The cite I posted was copied from our on-line reference source.

If their primary residence is not in the area affected by the hurricane, they would not be able to get a hardship. They should be able to get a loan unless the plan limits loans only for reasons of hardship. For the hardship you can rely on the representations of the participant. I would think a signed statement stating they need $XX dollars because they have suffered economic loss due to the hurricane is sufficient. For a loan, you should try to get the normal paperwork. The IRS special relief just relaxed the procedural requirements. It did not say they can be ignored. As soon as practicable a good faith effort and reasonable attempt should be made to obtain any missing documentation.

I very rarely suggest calling the DOL because it is almost always avoidable , but this may be one of those instances where it is appropriate. The way they are operating the plan effectively restricts catch-up contributions to highly compensated participants who can hit the $18,000 limit while still restricted to 15% of pay per payroll. That is just wrong and needs to be fixed. If you are getting nowhere with them, call the DOL. When they get a participant complaint, they have to look into it. When the DOL comes knocking, things like this will get fixed real quick.

Because the affected people give money to politicians.