Bri

For a participant past NRD, does the law require you to give the greater of actuarial increase vs. continued accrual, or just continued accrual ?

EGTRA-EGTRA-read-all-about-it says that employee 401(k) will not count as employer contributions toward the section 404 deduction limits. Does anyone know whether they will still be counted as employer contributions for the purpose of determining top heavy minimum accrual requirements. In other words, does this mean owners in a top heavy plan can defer the maximum without having to give everyone else a 3% minimum? --bri

Participant has taken a loan from her 401(k) for eighteen months, and is later terminated. Plan allows her to continue making repayments, rather than making the entire balance payable right then and there. Does it seem wise or practical to allow the participant to re-amortize the loan to spread out the payments, say, to the five year maximum, at a lower per payment amount? More importantly, since the plan allows active employees to do this, does it *have* to allow the ex-employee (who, rumor has it, may return to work for the employer in a few months) this option?

I did just think of this....What if a guy took a hardship withdrawal on 12-31-99....He wouldn't be eligible to defer in all of 2000 (unless he's got a 12-31-00 paycheck). Yet I know that he's still included in the ADP test for the year in that case. So I guess you would have to keep them in. oh well, just thinking out loud... --bri

Here's a completely theoretical question but thought-provoking.... Let's say a plan year just ended on 6-30-2000, and now the company is changing to a 12-31 year end, so there's a short plan year for the rest of 2000. We have an HCE who already deferred $10,500 in the first half of 2000. I would like to at least suggest that the participant is not eligible to participate in the 401(k) arrangement in the plan year, or the 401(m) match arrangement (assume no post-tax allowed.) I mean, it could be lousy not having a zero in your ADP test (not eligible to defer), but it may improve your coverage ratio for the 401(m) part of the plan. I doubt there's any code to back me up, but what do the experts say? --bri