Leaderboard

pay attention to the language in BOTH plans. Minimu required is 3.0% but this can get overruled by the "bad" Plan Doc language - I have seen it on many ocasions.

At the end of the day, no matter what label you slap onto them, they will still be considered by the IRS to be LTPTs. Since they are only allowed to defer, so let them! They will not be getting employer match or nonelective contributions. Make eligibility for deferrals date of hire and be done with wrangling over whether they met the hours requirement. But keep the age 21 and 1,000 hours requirement for employer contributions. If you think about it this way, you avoid a lot of gnashing of teeth and splitting of hairs over this issue.

What does the DC plan say? Does DC plan give 5% or does it give leeway to do 3% if DB is frozen and no accruals?

What do the documents governing the plan provide? Or, if not yet amended to provide that a participant may elect that a nonelective contribution be treated as a Roth contribution, what does the plan’s sponsor want the remedial amendment to provide? And if the plan’s sponsor expects to use IRS-preapproved documents, which choices will those documents allow?

It depends on the plan document and administrative procedures. For our plans, participants have the ability to change between pre-tax and Roth ER at any time, just like they can for their employee contributions.

Oh the 5-year clock - Thank you for that!

Rev. Rul. 84-69 (emphasis added):

About Connor’s observation: Under the Treasury’s interpretation (which under the 1978 Reorganization Plan also is persuasive authority to interpret ERISA § 203(a), except for § 203(a)(3)(B)): “[Y]ears which may be disregarded under [Internal Revenue Code §] 410(a)(5)(D) may be disregarded in determining when participation commenced [to determine the applicable “anniversary of the date the plan participant commences participation in the plan”].” 26 C.F.R. § 1.411(a)-7(b)(1)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.411(a)-7#p-1.411(a)-7(b)(1)(ii). EBECatty: IF one treats the Treasury’s rule as a persuasive interpretation of the statute or the plan, might specifying something a plan may disregard mean that a period not meeting that § 410(a)(5)(D) standard is not disregarded in counting the normal retirement age participation period? (I have never considered your question and have not read the relevant law; I express no view.) This is not advice to anyone.