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Let's say a pw contract requires $100 per hour. Everyone gets paid $100 in cash except for those who elect to defer who will as example receive $90 in cash, they defer $5, and receive $5 match. There may be a tax qualification issue but I am not quite sure. I would be wary if the eligibility requirements are not immediate for deferrals and match meaning some of the pw employees are eligible, and others are not. I would feel uncomfortable proceeding when the plan provisions are inconsistent.

While I'm sure it wasn't the answer you wanted, your ex really isn't getting more than if the amount was transferred on the day the decree was signed since he/she is only getting earnings on that amount.

So if they defer (or don’t defer), and thus get the match as pw (or they get no match), that deferral election can also affects their wages that are required to be paid, not just their match. So the match and the wages can both be contingent upon the election to defer. For example, a pw contract requires $42 per hour. The plan does a pw match equal to a dollar for dollar match of 5% of pay. Gilligan’s pay is normally $40 per hour. He chooses to defer nothing. That election gets him $2 more per hour in wages. Next time, Gilligan elects to defer $2, and that election gets him $2 of match but no extra wages. Finally, on the next job Gilligan defers $1 per hour. This deferral election turns into both $1 of match and $1 of extra pay. IRC 401(k)(4)(A): Benefits (other than matching contributions) must not be contingent on election to defer. The amount of extra wages required to satisfy the contract, are contingent upon deferrals. Does that violate 401(k)(4)? It’s not a problem with the pw contract, certainly any type of employer contribution can be used to satisfy that. To me it’s a tax qualification question. IMO, the most solid ground here would be to have a document that has IRS approval for using prevailing wage as a match. Maybe that’s too cautious?

yes give it a shot since the employer's intention is reflected in employee communications. make sure you show it does not affect coverage, non-discrimination, etc. Worst case scenario is they say no and you have to make qnecs. The IRS made some concession on a VCP filing we did in a similar situation.

The OP is titled "controlled group issue." If the spouses have a minor child the two entities/employers will continue to be a controlled group.

The only reg I can think of that addresses work-study students is the 403(b) reg listing of special types of excludible employees, see 1.403(b)-5(b)(4)(ii)(D). If the sponsor wants them excluded from the plan, I would suggest the plan be amended to specifically exclude them.

Maybe GEICO is the insurer and it's so easy a caveman can do it.

The question is why they don't want the prior TPA to terminate the plan. Best guess is they thought it was too expensive. The other TPA may have insisted on filing with the IRS - which is strongly recommended with 412(i)/412(e) plans, and the client is trying to be cheap. YOu really need and actuary to do this - you have problems you are probably not aware of, such as correct valuation of the insurance products, 415 limits on the distribution, possible waivers if short. Lots of stuff. Hope you are billing by the hour and not a flat fee.

Thanks so much. I wish I could refuse this work - but the decision is not mine. Thanks again. An actuary subject to the ASB rules would turn down an assignment for which they are not qualified. But if you have to do the job, make sure your E/O coverage is current. You need to learn the rules for 412(e)(3) and coverage for PBGC plans, and then you might be able to perform this job. Good luck.