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Found 2 results

  1. mefrancis1729
    I am designing a new 401(k) profit sharing plan. I have a terminated participant who is young and has low compensation. They enter the plan and then terminate in the middle of the year. I want to use this participant to pass 401(a)(4) as it would be the cheapest option. I end up having to give him about 90% of his compensation. If i design the plan so that there is no hour requirement or last day requirement for discretionary profit sharing, I believe I can give him this large amount. But how should I handle vesting? Does he need to be 100% vested as I am using him so heavily to pass testing? Could he be only 20% vested? Or could I even leave him at 0% vested? How would you handle the vesting if he needed to be 100% vested, but you didnt want any other employees to be automatically 100% vested?
  2. Spencer
    I have a new takeover client. In inital review of the plan I noticed that a terminated participant has a defaulted loan. I send client financial institution paperwork to process deemed distribution. Client asks if particpant can take lump distribution and then pay back outstanding loan balance. Particpant is over 60 so no penalty for early withdrawal. He is trying to avoid taxable income of loan. thoughts?
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