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Some plans/recordkeepers/payroll systems (including my current employer) require a separate deferral election with respect to the catch up amount. I think it's stupid/illogical and possibly some kind of violation but I have to be careful to go into our online plan portal and enter my "catch up" deferral election after I've hit the basic deferral limit. Point being you may not have a missed deferral opportunity depending on the plan's requirements for electing "catch up" deferrals.

I'm amused because Boris Badenov himself seems to have started the prior discussion. (I know...."I always have fiendish plan!!")

It never ceases to amaze me how the IRS, DOL and industry practitioners have generally absolved the participant of any and all responsibility with respect to their contributions and retirement accounts. If I'm over age 50 and knowing/expecting/wanting to save more than $18,500 then I'm going to be damn sure my contributions continue. Or people who elect a contribution change and don't recognize (for months or even years - not a lie) that their contribution (or take home pay) never changed - hello, McFly! Yes, plan sponsors are responsible to properly administer their plans, but I think participants should incur some responsibility as well, especially if they have received multiple sources (pay stubs, quarterly statements, etc.) that clearly show any errors. Sorry, just my grumpy Monday rant because the 'Cuse got toasted Saturday at Va Tech and the wrong two teams are in the Super Bowl.

The top heavy exemption says: Voluntary after-tax contributions are not part of a CODA [see 1.401(k)-1(a)(2)(ii)] and they are not match or safe harbor contributions, so a plan that has them does not meet the requirements for the top heavy exemption.

Or, would it fall under the Small Excess Amounts in 6.02(5)(e) on the very bottom of page 32? (e) Small Excess Amounts. Generally, if the total amount of an Excess Amount with respect to the benefit of a participant or beneficiary is $100 or less, the Plan Sponsor is not required to distribute or forfeit such Excess Amount. However, if the Excess Amount exceeds a statutory limit, the participant or beneficiary must be notified that the Excess Amount, including any investment gains, is not eligible for favorable tax treatment accorded to distributions from the plan (and, specifically, is not eligible for taxfree rollover). See section 6.06(1) for such notice requirements.

I am a TPA and not an investment advisor but the plan sponsor should review with a licensed and experienced investment advisor the fiduciary issues raised by having different groups of employees in different investment packages. From an administration point of view, I recommend (and, in fact, would insist) that this plan sponsor choose a provider with a good service package and quality investments and that all future contributions from X date go to that provider and make sure that intra-plan transfers to the new provider are permitted. I also urge such clients to not permit loans, etc from the old vendors in order to consolidate administration and encourage transfers to the new vendor. My firm would decline this plan for administrative and pricing reasons if this client would not agree to at least cease active contributions to the 3 "former" vendors (unless one of them is selected as the new vendor). I assume this is an ERISA plan. And following on that assumption, there will be a sufficient number of challenges keeping track of the 3 sets of "legacy" accounts or contracts for every recordkeeping purpose (benefits, SAR, 5500, etc). I cannot imagine charging enough to compensate a TPA for dealing with individuals with different hire dates being in different recordkeeping packages. The bottom line as I see it is that this plan sponsor is probably not used to being responsible for and operating an ERISA plan. The Plan Sponsor is responsible for choosing and continuing to work with vendors. This responsibility cannot be delegated to Participants who might be "unhappy" if their first choice as a vendor is not the new package. The fact is that the very Participant who demanded that he or she be able to continue to use a vendor who does not meet the selection criterion could sue the plan sponsor later if he or she experiences performance or execution problems compared to another Participant who, hired later, turns out to have been offered a superior package. I always believe that one of the things clients hire me/us for is to give them advice on how to create and maintain a quality, well run plan which will not have compliance or administrative problems. My suggestion would be to try to help this client see that the idea initially proposed is not a good one. An ERISA plan needs to have one vendor and a plan which starts out with 3 vendors needs to have a strategy that results in a minimal number of vendors as soon as possible. All questions welcome! PNJ