USERRA & company contribs

[Brian Gallagher]

If someone was out, say, for 1 year on Military leave--1/1/2001 thru 12/31/2001. What compensation should be used when determining a Profit Sharing contribution? Does she even get one?

The plan uses w-2 wages for comp.

[QDROphile]

The amount she would have earned if she had been at work. She gets a contribution if she meets the statutory requirements for the leave and the return.

[Guest carsca]

QDROphile,

Certainly under USERRA and IRC Section 414(u)(8)©, a returning employee has a limited right to make "make up" 401(k) Contributions (and if such contributions are made, the Company would need to make Matching Contributions on such contributions). However, could you please provide a cite that would support your position that an employer must make up missed Profit Sharing Contributions (assuming the Plan provides for such contributions)?

Thanks in advance.

[Brian Gallagher]

Here is a document that we send out to our clients. It doesn't cite code, but it passed muster w/ our attorneys.

[QDROphile]

I regret being too busy to do that. I think you have to go to USERRA, and that is more work for me than pulling a citation from tax materials.

[Guest Remysis]

The cite for the sustantive qualified plan rights provided by USERRA (as opposed to the tax provisions) are at 38 USC 4318, which is clear both for benefit accruals and allocations of employer contributions.

One question I've always had about a retroactive allocation of a profit sharing allocation under USERRA is how this works where the contribution was a particular dollar amount that was allocated pro rata based on comp. Had the employee been actively employeed during the year, there would have been another employee with comp in the mix and allocations to all as a percentage of comp would have decreased. Doesn't seem like the right answer could be to retroactively reduce allocations to other participants and allocate to returning employee based on the reduced percentage as if he had been employed. On the other hand, giving the employee an allocation based on the percentage of comp allocated to all others doesn't seem consistent with the general intent of USERRA of restoring the employee to where he would have been had he been employed. Think you could get away with basing the allocation to the returning employee on the reduced percentage but not retroactively reducing the allocation to everyone else?

There is very little formal guidance on USERRA and these are ceasing to be merely academic questions.

[Guest mmc]

The benefits under USERRA are contingent upon re-employment. When the employee is re-employed, they are entitled to the ps contribution based on the compensation they would have earned (including raises). If the compensation is not readily determinable (e.g. commissions, overtime), the employee's average compensation from the employer during the 12 months preceding the military service is used, or the actual period of employment, if shorter than 12 months.