Leaderboard

Agree that no issue if want to 100% vest. Actually, you've got a 33.33% reduction and a "major corporate event," so probably is a PT.

Can you deduct the deferral at the time the advance is made? Is that feasible with the software? Example (shown on the ATM or whatever device the trucker uses to withdraw the advance) "You have elected today to receive an advance of $200. You previously elected to contribute 10% to your 401(k). The amount you are receiving today is $180. The remaining $20 will be contributed to your account in the 401(k) plan in accordance with your prior election. Press yes to confirm or no to change your advance request. Press 401(k) to modify your 401(k) election. Press hardship to take a hardship withdrawal from your 401(k). Press loan to take a 401(k) loan. Press help if you don't understand any of this." Yes this would be confusing. Yes it could result in lower 401(k) elections, yada, yada, yada. I am just throwing out an idea. Another option is to disallow advances that would lower the net check below the deferral amount for that pay period. Again, this might cause IT heartburn. P.S. Just joking about "press 401(k)" etc.

Under ERISA Employee Contributions to a cafeteria plan are plan assets just like 401k deferrals. As plan assets these deferrals need to be held in a Trust. However the DOL has issued a nonenforcement policy of the Trust Requirement in Technical Release 92-01. To take advantage of this nonenforcement policy the employee cafeteria plan contributions should remain in the general assets of the employer. To set them apart in a separate checking account creates the impression of creating a separate fund to pay plan benefits and would lose the nonenforcement exception and require setting up a trust. As a side note, creating a cafeteria plan is more than just a checking account to pay benefits. You need a plan document and the plan must meet nondiscrimination requirements. In many ways it is just like a 401k except you paying health and dependent care claims. Another wrinkle is that these plans are subject to HIPPA, COBRA and the Affordable Care Act.

In the meantime (as we wait for guidance), there's Rev. Rul. 89-49, 1989-1 C.B. 117, which is summarized in one publication as follows: Factors to be considered include the degree of control the federal or state government has over the organization’s everyday operations, whether there is specific legislation creating the organization, the source of funds for the organization, the manner in which the organization’s operating officials are selected, and whether the governmental unit involved considers the organization’s employees to be its own employees. A plan is not considered a governmental plan merely because the sponsoring organization has a relationship with a governmental unit or some quasi-governmental power.