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  1. I have a client who has just closed a U.S. DOL investigation for (very) late deposit of prevailing wage contributions. They have now paid in all of the unpaid contributions and paid and allocated estimated interest based on a method approved by the DOL investigator, paid corrective distributions to former employees and they have received a closing letter. I expected that these late contributions would also be an operational defect that would require a VCP filing, and my client is prepared to do this. My biggest concern had been whether the (DOL-approved) method of allocating interest would be acceptable to the IRS. But, I am now wondering if there is in fact any operational defect, because I cannot find any plan provision that specifies when these contributions have to be made. The plan has a schedule to the Adoption Agreement that lists the prevailing wage fringe benefit portion to be paid for each covered hour. The plan provision for Time of Payment of Employer's Contribution states: "Unless otherwise provided by contract or law, the Employer may make its contribution to the Plan for a particular Plan Year at such time as the Employer, in its sole discretion, determines." I don't think the "unless otherwise provided..." language incorporates the statute or contractual language by reference. There is also plenty of typical plan language about when annual addition are credited, and when contributions must be made to be deductible for a plan year, or to be taken into account for testing, but those aren't really the issue here. State law does in fact require the contributions to be made quarterly, and there clearly has been a violation of this law. If the plan document doesn't have a deadline for the contribution, is there an operational defect when contributions are made later than the statutory or contractual deadline? I had assumed the answer was yes. But after parsing all the plan language relating to employer contributions, I am now thinking that the answer is no. And that would mean there is no operational failure that could be corrected under VCP. Agree or disagree?
  2. Plan has age 21, 1 YOS, dual entry eligibility requirements for all contributions except prevailing wage contributions which have to be made whenever an employee works on a prevailing wage job. For purposes of counting participants on the first day of the year do we have to count all employees since they potentially could be assigned to a prevailing wage job or can we somehow split the baby and only count those employees who haven't met "regular" eligibility but who are in fact working on a PW job on the magic date?
  3. Plan is not Top Heavy and probably never will be. 401(k) w/ Safe Harbor Match - immediate eligibility Cross Tested Profit Sharing - 1 YOS, 1,000 hours, Last Day rule, everyone in their own group. Business owners use the Profit Sharing to maximize their benefit at the end of the year. Employer wants to keep Profit Sharing contributions to an absolute minimum, excluding as many employees as possible. Prevailing Wage - may be used to offset any required SH Match, if applicable. Who gets the Gateway? Employee 1: Made no 401(k) deferrals. Got no Prevailing Wage. Met 1 YOS requirement in a prior year. Worked 1,000 hours and was employed on the last day of current year. Employee 2: Deferred 5%. Got a Prevailing Wage contribution that represented 4% of compensation. Employee 3: Made no 401(k) deferrals. Got a Prevailing Wage contribution that represented 1% of compensation. Employee 4: Terminated prior to the end of the year. Didn't defer. Got a Prevailing Wage contribution representing 4% of compensation. Where the Gateway is concerned, do I only care about employees who received the Prevailing Wage contribution, or does an employee qualify for the Gateway simply by virtue of having provided one year of service and being employed on the last day? Thanks!
  4. This is for a cross tested 401k Safe Harbor plan that provides: 1 year eligibility for 401k, employer SHM, optional/discretionary ACP SHM and PS Immediate eligibility for Davis Bacon/Prevailing Wage type contribution Vesting is 2/20 for PS and optional ACP SHM 100% immediate Vesting for 401k, SHM and DB/PW type contributions The DB/PW provision states (N/S VS doc): "The Employer will make a Prevailing Wage Contribution on behalf of each Participant who performs services subject to the Service Contract Act, Davis-Bacon Act or similar... The Prevailing Wage Contribution shall be an amount equal to the balance [emphasis mine] of the fringe benefit payment for health and welfare for each Participant (after deducting the cost of cash differential payments for the Participant) based on the hourly contribution rate for the Participant's employment classification as designated on Schedule A as attached to this [Plan] The PW contribution is defined as non-elective (but specifically not a QNEC) and shall be used to offset the employer's contributions (other than ADP test SH contributions) The employer has a DB/PW job coming up and would like to contribute the fringe portion (or at least a portion of it) to the plan. It should be noted there have been other jobs subject to DB/PW completed in the past (while plan has been in place) whereby the basic wage and fringe were both paid in cash (i.e. wages). Will it be sufficient for the employer to provide advance notice to the affected employees that on Job X, $#.## per hour will be contributed to the Plan in lieu of cash payment in accordance with DB/PW? These contributions/hours will be tracked within payroll and plan record kept separately (i.e. own source bucket). It is okay for the employer to choose whether or not to contribute the DB/PW amounts from job to job, and how much of the fringe portion amount from job to job, in a discretionary manner so long as advance notice is provided to affected employees and the hours/contributions are tracked/record kept accordingly? It would appear to be permissible since the Plan's wording states the contribution to the Plan is the "balance"... (see above). Apologies for the length of this post. Thank you
  5. Guest

    Davis-Bacon 401(k) plan

    If a 401(k) plan provides for immediate entry and vesting for prevailing wage contributions, is the employer/plan subject to the California law in regards to “Annualization” of the employees hours worked for both private and public jobs?
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