Leaderboard

2023

A few thoughts off the cuff, probably not exhaustive and definitely not fully formed: Does this convert $3/hour for everyone (whether they choose the $4 to the plan or $3 in cash) into a CODA? It's essentially giving everyone a $3/hour raise, with some subset of people electing to defer it into the plan (as an elective deferral subject to 402(g) limits, etc.) and some taking it in cash. If so, does that make the additional $1/hour going into the plan (for those who elect it) a match? If someone chooses to defer $3/hour into the plan, the employer makes an additional $1/hour contribution, which cannot be a PS contribution without violating the contingent benefit rule (i.e., you cannot offer $1 in profit sharing only for participants who contribute $3 in deferrals). Not sure how you would draft the match formula ("a $1 match on every $3 deferred, but only if you choose the option offered by the employer and capped based on the participant's hours of service during the year"?) or who would be designated as the employees eligible for the match. Presumably most people who choose the plan contributions will skew toward HCEs, which could affect ADP and ACP and match coverage if the extra $1 is treated as a match. The employer will still get a deduction, either for contributions to the plan or compensation paid via payroll, but employer-side FICA would surely increase as a result of people choosing cash over employer contributions.

In my experience, an unwinding of a ROBS brings plenty of billable hours; but no prospective client ever has been willing to spend even a small amount to set up correctly a retirement plan's investment in a new business.

just a thought since I have not had a chance to deal with that in practice. If the original DB plan existed for 5 years, it might be possible to freeze the participation and not to allow this new hire in based on Secure Act (1.0 it is). I am sure there are a lot of issues to think through but it might work.