Stable Two Financial

You might only give the SAR to the affected participants but people talk....or text.

I'd recommend they amend the plan. As to the need to do this in the future, I think that's part of the reason to get it done by amendment. I don't see it as a requirement for the future but it certainly will set expectations.

Sorry, but I have to disagree with you. Compensation used to determine the SH contribution must satisfy 414(s). It is not required to be a 414(s) SH definition. The cite you posted says the definition of 1.414(s)-1 is incorporated. That definition includes 1.414(s)-1(d) "Alternative definitions of compensation that satisfy 414(s)". Our PPA approved VS document allows the exclusion of bonus, commission or overtime from the SH compensation definition. Of course, it also cautions that electing those options may cause the definition to fail to satisfy 414(s). Question 1 at the 2014 ASPPA Annual Conference DC Q&A session dealt with how to correct a SH plan using a definition of compensation that was determined to not satisfy 414(s). I agree with Kevin. Somewhere along the way I think the IRS clarified this point. In the original readings of the SH regulations it was generally read that you could have no compensation exclusions for the SH. Pre-approved documents prior to PPA generally reflected this. Post PPA pre-approved documents state that the definition of compensation has to be tested. Maybe someone knows/remembers where the IRS clarified it, possibly with the LRM's?

If you happen across the reference I'd appreciate it. My first reaction would be this approach but I couldn't find much support in EPCRS. My question to the client was if your participant was contributing 15% but really meant for it to be zero..... In my experience the participant would say something to somebody.

It's like you've read their service agreement. Your suggestion is my game plan.

To answer your question on that: The argument here is that they are not deferrals made under the written terms of the plan. Therefore, they should not be tested within the ADP test and should not be treated as deferrals for plan purposes. So, if you were to forfeit them and make the participant whole outside the plan, then this would effectively put the plan in the condition had the deferrals not happened. I'm not saying I would agree with this, but understand how their position could be reasonable. Hope it works out for you :-) That's actually a thought provoking approach. Not saying I agree..... Sadly this was not the theory. My observation with this vendor is they've lost a lot of talent in the Legal/Compliance departments and Mistake of Fact is the go to solution for any situation involving deferrals.

What you describe sounds like you are using two plans. I wouldn't expect the .50% to be reflected in the safe harbor 401k.

I'm not familiar with that specific document but if I understand the situation you would create the safe harbor for everyone. The additional amounts would go as an additional profit sharing contribution which might be subject to a vesting schedule. Each bargaining group would be listed with their fixed contribution amount (this is where it can get tricky depending on what they negotiated and the flexibility of the document) The cross test shouldn't apply since the union is dis-aggregated from the NDT test. Good luck.

Are you using a pre-approved document? What type? Will the employer contribution be treated as a Profit Sharing contribution?

I agree with Tom. These schemes tend to end poorly when reality meets testing.

It can be done on one document but there are a number of design considerations. Not every pre-approved document will give you the flexibility you might need if there is one design for the union and another for non-union employees.

And yes Stkmastr is Stable Two Financial

Thanks for the thoughts ETA, I can agree that often logic plays little part in the answers we ERISA nerds give our clients. It is not AXA but you are correct in that I think this could be correctible under SCP. There is no guidance I can stand on since, as you correctly state, neither the plan document nor the standardized corrections under EPCRS really address this. Nonetheless, if we put the plan back into the position it would have been in had the defect not occurred the money would not be in the plan. I'm just gobsmacked that any major vendor would recommend forfeiture of deferrals. How, why could you do THAT?