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By "limited trustee" do you mean they have control over the investments in the account? That discretion would not include the decision to not accept contributions, IMHO. All of the accounts should be titled under the Trust ID as FBO the participant.

As long as THE CLIENT has Base Comp defined...

Bo knows pronouns (for those old enough - otherwise, Bri knows pronouns)

If an employer wants to establish a new program to make lifetime payments to some former employees who retired long ago, would the program be considered an ERISA pension plan? 29 CFR §2510.3-3(b) says that the term "employee benefit plan" does not include a plan under which no employees are participants covered under the plan. The definition of "employee" is "an individual employed by an employer". At least one court has interpreted that language to mean that ERISA covers a plan only when the employer established it to provide benefits to at least some of its then-employees. A few other courts have said former-employee-only plans are not ERISA plans based on the policy argument that the objective of ERISA is to ensure that workers get promised benefits upon retirement, especially since some of the promised benefits were in lieu of other compensation that workers may have received, and those objectives do not apply to such plans. Is anyone aware of more definitive authority that could support (or contradict) the position that ERISA does not cover plans that are established to provide benefits to former employees only?

I don't think 414s is going to be an issue. The biggest exclusions are bonuses for two HCE (for example, someone made in excess of $300k but the bulk of it was through a bonus therefore the usable salary is around $130k). Because of that the HCE percentage is around 69% while the NHCE is 92.80%. Since the NHCE are benefiting more, I'd think it would pass the testing. So with that in mind, putting the exclusion as "All Non-Base Pay" should be acceptable for IRS standards?

And make sure you will pass 414s before you even get started. Clients don't understand how it works and don't realize how rare it is to actually pass.

Yes and yes.

I usually see override language to the allocation conditions specifically for those amounts.

I don't mind singular they, but if one is to choose that pronoun, they is going to have to use singular verb forms! Bri am using another such concept here - it's not that I'm referring to myself in the third person, I'm just not using a pronoun for my proper name.

There has been discussion on this issue in the past. If you use the search box you might be able to dig up the thread. From memory, there were two key points: 1. the plan should have some kind of written administrative procedure that says deferral elections will be honored only to the extent possible, taking into account the actual compensation available after other withholdings and deductions, and 2. cash tips, while still compensation, can't be used to fund deferrals, because in order to be a deferral it has to be paid by the employer to the trust before it is received by the employee, and that can't happen if the employee received the tip in cash.

Generally a participant wouldn't be "forced" to select a particular form of benefit, since whenever a plan is subject to QJSA it also has to offer the participant a QOSA. If they make the QJSA the 100% survivor annuity, then the QOSA would be a 50% survivor annuity. The QOSA can be elected by the participant without spousal consent. 1.411(d)-3(c) provides rules about how and when redundant forms of benefit can be eliminated.

I think you misread the first post. It's not the plan sponsor who doesn't want the account, but an employee/participant.

You've got a single employer (controlled group) with two plans? Why make it difficult like that? They have to be tested together.

Hi, all -- There is no clear guidance from the IRS or Treasury about how to determine HCEs in the year of a stock acquisition or a business merger. If you look at the Code and regulations, the clear intent of the rules was that there would be one applicable determination of who is an HCE and then that would apply across all plans. But, in a stock acquisition, particularly where the acquired company and the buyer each sponsors its own plan and the plans will operate separately during the transition period, it is not clear at all how to determine HCEs. So, I think it makes the most sense, and is defensible as a reasonable interpretation of the law, that you maintain the pre-existing HCEs from before the acquisition vis-a-vis each plan for the year of the acquisition. A couple of additional notes: first, the transition rules take you out of coverage testing, which relieves you of needing to define HCEs for that purpose. But, the transition rule does not relieve you of nondiscrimination testing. If your two 401(k) plans are just that, then you can go ahead and test them separately and the use of the prior HCEs in the year of transition probably makes the nondiscrimination testing harder to pass than if you had some kind of cross-company definition of HCE (i.e., there is some possibilty that people who were HCEs in the acquired company would become NHCEs due to the top 20% rule or something similar). HOWEVER, remember that, if any of the plans use cross-testing and you use the average benefit percentage test as part of the cross-testing, then you need to take into account benefits of all plans of the company ... which means that the definition of HCE becomes problematic from that standpoint. So, you may need to look at this a little differently in that circumstance. Last but not least, look for situations in which any of the assumptions about what the rules might be if the IRS/Treasury actually wrote them creates a skewed result which is abusive in nature. So, let's say that you make a reasonable assumption about who the HCEs are, and it turns out that, with that reasonable assumption, the amount that the HCEs get or can contribute quadruples from prior years. Just be careful that you are not creating a situation where the IRS would be tempted to exercise its rights under the coverage and nondiscrimination rules to consider something abusive and plan-disqualifying. Hope this helps. Everyone stay healthy! Ilene