Leaderboard

We were just discussing this scenario and (I think) you could set the plan up as a SH, excluding HCEs. That is deemed to meet SH requirements, and the fact that no one actually gets the SH is immaterial. Any employer contribution at all would trigger TH though.

If a participant has terminated employment with a small vested benefit/account balance, the law gives the plan administrator (consistent with applicable plan provisions) the authority to force them out. Best is for the participant to say how they want it distributed. Failing that, the plan administrator, having made a suitable effort to find and/or communicate with the participant, has the right to cash the small amount out. Unless the plan administrator fails to exercise due prudence in the selection of the default IRA provider (which might not even be subject to the same degree of scrutiny as other fiduciary acts), the expenses charged by the default IRA provider are of no consequence to the plan administrator. Remember, if the amount payable is over $200, there would have been an opportunity provided for the participant to choose between a lump sum or a direct rollover, and only if there is no timely response can the money be sent on the IRA provider, so the participant, by failing to keep in touch with the sponsor and/or to respond to the election that was offered, is at least partially at fault. The plan will not afford veto power over the distribution to the participant - these are involuntary by nature.

Definitely full report. Surprised the DOL hasn't rejected a filing with just the opinion letter. Also attach schedule of investments and reportable transactions. They're a separate requirement.

The reason you might not be able to reopen (I kind of like the defrost comment!) the ESOP is your are not going to be able to pass required testing. You have to show the plan covers enough people. If most of your Highly Compensated employees are in the ESOP from before it was frozen and lots of rank and file employees are "frozen out" of the plan it will never pass the tests. The only way to know for sure is to do what RLL says talk to an experience ESOP professional and they can run testing projections. Also, they could run projections on what would happen if you start letting people back into the plan and giving them contribution allocations. I am more convince now then my first reply you can't get quality answers without spending some money to get some professional help from someone who knows ESOPs and can see all the data. JUST SAW YOUR NEW QUESTION WHILE TYPING THE ABOVE: As I stated above most likely you can't make contributions and not let people in. You will most likely fail critical nondiscrimination testing.

put another way. any NHCE who receives a non-elective contribution must receive the gateway. the non-elective can be profit sharing (or forfeiture). A non-elective is not a match or deferral.

Is any BenefitsLink reader aware of any U.S. law firm that has risked its owners' reputation and liability by delivering a written opinion that supports the zbenefits view?