deferrals from year end bonus

[eilano]

Employer allows HCE to defer from his year end bonus but does not allow staff employees to defer from their year end bonuses. Obviously, this is discriminatory but what corrections can be made, if any.

[chris]

what's the e/er's reasoning for treating them differently? Not that it makes it right.....

[eilano]

We don't know why he did this. He didn't think it was a problem until we told them.

[Kirk Maldonado]

I have a client that did something even stupider.

They have a wonderful investment available under their retirement plan, but only senior executives can invest their funds in it. This investment has historically provided much better returns than any of the other investments under the plan.

Can anybody top that?

[david rigby]

Can't top that Kirk, but how you responded to it might also help answer the original question.

[QDROphile]

Since no one adressed the question about correction, here is a suggestion. It is not a prescription. The employer will make corrective contributions, including imputed earnings, for each year for each NHCE in an amount that is the greater of the NHCE's deferral percentage for the year or the average ADP for the NHCEs for the year. The correction may have to be done by filing with the IRS. I have doubts about the availability of self correction under these circumstances.