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If it was Docu-signed then any text about a signing date is just stray letters.

If a blank line calls for filling-in a date on which something became, becomes, or will become applicable and the writing does not otherwise state that date, one might worry about an incomplete expression. But if a fill-in would be merely a recital of when something was signed (I’d ignore the nonsense about “executed”) and there is useful evidence of when it was signed, what incompleteness would a maker worry about?

I dunno. One red flag and probably the fault of a lawyer getting paid by the word, adding too many words.

I agree with Bird and add that a similar confrontation would occur if the employee asserts that a non-deferral employer contribution should be made. They seem to be on the same page, and that effectively establishes an interpretation of the contract even if we outsiders don’t have the same interpretation. If one or the other steps outside of the interpretation, that is a contract matter, not a plan matter. I am curious about the enforceability of a promise (implied or express) to make a particular deferral election (in this case the employer might not care unless the amount is meant to limit the deferral). My first thought is not, because then it would not be elective. Or if it is, then it is not elective and the plan has a problem with treating the deferrals as elective deferrals.

I would just point out the poorly worded (unnecessary!) language and move on. Having said that, I suppose if the participant did try to change the election and not make the 401(k) contributions, and the employer tried to force it, then they have a problem.

Maybe there is more to this, but to me, if the participant does not have the option to receive the amount in cash, then it is not a 401(k) contribution. What would happen if they told the employer tomorrow that they want to stop contributing and they want cash instead? While the IRC distinguishes between pension and nonpension retirement plans (with 401(k) plans being an example of the latter), colloquially the term "pension" is often used to refer to any retirement plan, including a 401(k) plan.

Where is it labeled "pension funds"? In your first paragraph, you say that the employment agreement says that the amounts are to go into the 401(k). Did you misspeak? Also, 401(k) plans are a type of "pension plan" (using the ERISA definition), so it is technically not incorrect to refer to 401(k) funds as pension funds, even though that is not consistent with how most people use the term "pension". I agree that employment contract language has nothing to do with the plan. Your client needs to comply with the plan terms to the extent consistent with law, and they also need to separately comply with their employment contract obligations (at least to the extent that those terms are consistent with law). Is your concern that your client may have contradictory obligations, which are guaranteed to result in a breach of at least one duty? Generally, if you breach a contract, the remedy is that you have to pay the person the monetary value of what they should have received but did not due to your breach. So, worst case scenario, your client has to pay this employee cash rather than putting money into the plan. Perhaps they have to pay him a bit extra to account for the value of the tax advantages that he would have had if he had received the promised tax advantaged benefits rather than the cash. Setting aside the employment contract, it seems like the main question you are asking is whether the plan can comply with both the employment agreement and the plan terms simultaneously without running into tax qualification issues. 401(k) plans are permitted to offer one-time irrevocable elections provided that they meet certain strict requirements. If the requirements are met, the amounts are treated as employer contributions rather than employee contributions, and they do not count against the 402(g) limit. However, they can still raise nondiscrimination issues, the same as any other employer contribution that is going to some employees and not others. However, in this case, it appears that the client wants to treat (or has been treating?) these amounts as elective deferrals, notwithstanding the fact that they are subject to an irrevocable election. If the client has not been trying to take advantage of the one-time-irrevocable election rule (and it isn't provided for in the plan document), then I think it is pretty unlikely that they have conformed to those difficult rules by accident. I'm not saying you shouldn't look into it, but my guess is that treating the amounts as elective deferrals is probably correct. For reference, here's the text of the one-time irrevocable election rule from Treas. Reg. section 1.401(k)-1: (v) Certain one-time elections not treated as cash or deferred elections. A cash or deferred election does not include a one-time irrevocable election made no later than the employee's first becoming eligible under the plan or any other plan or arrangement of the employer that is described in section 219(g)(5)(A) (whether or not such other plan or arrangement has terminated), to have contributions equal to a specified amount or percentage of the employee's compensation (including no amount of compensation) made by the employer on the employee's behalf to the plan and a specified amount or percentage of the employee's compensation (including no amount of compensation) divided among all other plans or arrangements of the employer (including plans or arrangements not yet established) for the duration of the employee's employment with the employer, or in the case of a defined benefit plan to receive accruals or other benefits (including no benefits) under such plans. Thus, for example, employer contributions made pursuant to a one-time irrevocable election described in this paragraph are not treated as having been made pursuant to a cash or deferred election and are not includible in an employee's gross income by reason of § 1.402(a)-1(d). In the case of an irrevocable election made on or before December 23, 1994 - (A) The election does not fail to be treated as a one-time irrevocable election under this paragraph (a)(3)(v) merely because an employee was previously eligible under another plan of the employer (whether or not such other plan has terminated); and (B) In the case of a plan in which partners may participate, the election does not fail to be treated as a one-time irrevocable election under this paragraph (a)(3)(v) merely because the election was made after commencement of employment or after the employee's first becoming eligible under any plan of the employer, provided that the election was made before the first day of the first plan year beginning after December 31, 1988, or, if later, March 31, 1989.

I think employment contract language has no bearing on the qualified plan (e.g., when such contracts try to provide immediate entry into a plan that has eligibility requirements). The real question is whether or not this is an employee election which can be modified or if pursuant to the contract it is irrevocable. If it is the latter, then I do not think it is a salary deferral, which opens up other potential issues. If the compensation is being properly subjected to FICA et al and then deferred to the plan pursuant to the employee's election and ongoing discretion, no issue. Has a separate salary deferral election been executed for this or are they relying on the contract for such?

If all your rate groups (not including deferrals) pass at 70%, then you don't need to pass the average benefits percentage test (which does include deferrals).

I don't see this example as being any more stern than those we've seen in the past. Keep in mind that each regional office can have a different letter in use. It was just a few years ago that the Chicago office got into trouble by sending a "very stern" letter, which caused some backlash - and they changed it. Our approach, by the way, is to ALWAYS accept an invitation from the DOL when they are so kind as to invite you to their party. A VFCP is generally not too difficult to prepare, and provided you give them the right information concerning the deposits, earnings deposits, and excise tax (whether paid to the plan under the exemption or to the IRS on a 5330), the no action letter is "cheap" insurance. ...just don't file every year or they'll think you are incapable of playing by the rules....

Yeah that is why the DOL program that caps the fine is so important. It used to be you could try to ask for some kind of forgiveness but at this point the down side is too much. Likewise the filing a form without the auditor's report but a note is getting riskier also. That fine for an information return with no tax implications is just plain silly

That table won't be updated, since the pre-ARP segment rates are no longer available to be used for plan years starting in 2022. What is the exact definition of interest crediting rate in the plan document? Does Notice 2021-48 section III.B.3 shed any light on your situation?

We had clients execute an internal Plan Administrator memorandum (and give us a copy) with the applicable effective date if they had intended to provide Coronavirus Related Distributions (CRDs) when such were available and would think similar methodology would work for this.