kboyce

Thanks for the cites. After reading all available info, here's what I've interpreted. 1. If a participant is fully vested, under the longest allowable vesting schedule, forfeiture under "bad boy" clause is not an option. 2. A plan may required an employee to complete/execute an employment agreement or other contract prior to allowing the employee to become a participant. This approach would not allow a forfeiture under the bad boy clause but would potentially create other legal recourse for the employer. My conclusion: A bad boy clause can only work in a situation where a participant is not vested under the maximum statutory vesting schedule. Am I missing anthing here???

I am looking for a cite or information to research "bad boy" clauses. Specifically, a plan sponsor would like to forfeit the account of anyone leaving their firm and going to work for a local competitor. I seem to recall these clauses were severely restricted in their use but can't remember where I can find more specifics.

The requirement to submit a list of plan sponsors utilizing a regional prototype was eliminated 2(?) years ago. There is a requirement that the prototype sponsor maintain a list and furnish if the IRS requests. I agree the unauthorized use of a prototype document, if not in some violation of the document, would be treated as an Individually Designed Plan. ------------------

Be careful with respect to certain state laws. Arizona and some other states require an empoyee must acknowledge in writing any reduction in pay. The negative election have been implement by adding the required disclosure to the SPD or employee handbook & require the employee to sign an acknowledgement receipt.

Agreed, service group is perfectly acceptable. But I would consider adding additional groups to handle HCE's. The HCE classes can be further broken down by service groups. This allows more control in the case of a fairly young HCE who might otherwise mess up the 401(a)(4) test results. From your message it wasn't clear to me but I would strongly suggest eliminating any specific contribution % for each class. The document can provide there is a separate discretionary contribution for each class for absolute flexibility. [This message has been edited by kboyce (edited 11-25-98).]

You can identify each attorney by specific attribute. For example, attorneys born on or after 19XX & attorneys born before 19XX. You can also set up a stand-alone plans for one or both partners. This/these plans can even be a Money Purchase if contributions for NHCE's are sufficient and Money purchase plan can alleviate Sec 404 deduction limit issues. Core plan can exclude one or both partners by name. All plans are tested for average benefit & rate segment testing as a single plan. If one partner is left in core plan, then any contribution within 401(a)(4) & 404 limits is an option. This approach has been used since 1-1-97 with subsequent IRS approval on document language & structure. [This message has been edited by kboyce (edited 11-25-98).]