Guest PJW Posted November 13, 2001 Posted November 13, 2001 I have a question about compensation for the purpose of satisfying the safe harbor rules for matching contributions. Currently, the plan does not include overtime as a component for determining participant deferrals. The plan will be converting to a SH plan through the matching method in the near future and the SH match will be based on a definition of compensation that includes overtime. Will the plan fail to meet the SH rules if the definition of compensation for deferral purposes does not include overtime (even though overtime will be considered for determining the SH match)?
Guest earthy Posted November 13, 2001 Posted November 13, 2001 Yes, a profit sharing or matching plan may include overtime in the definition of compensation and still fit within the safe-harbor. Problems generally arise when a group subject to the FLSA (Fair Labor and Standards Act) specifically excludes overtime from the definition of compensation. In these instances, the rank and file participants of the 401(a) plan may be considered to be being discriminated against. The FLSA has a separate set of overtime provisions. earthy
Medusa Posted November 13, 2001 Posted November 13, 2001 Does your situation differ significantly from Example 3 in Notice 98-52?
Guest PJW Posted November 13, 2001 Posted November 13, 2001 Yes, that's exactly what I was looking for. Thanks.
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