Client not complying with plan document

[Guest moosegirl]

We are dealing with a client who has not been complying with his plan document regarding the definition of compensation. Probably not a big issue in terms of dollars but what exposure does this client have by not complying with the terms/definitions of the document?

[QDROphile]

Plan disqualification or penalties and/or costs of correction.

[maverick]

We had a situation like this a couple years ago. Client reported wage, but did not include overtime. Guess what? Only the NHCE work overtime, so the definition of comp was discriminatory. After several letters and phone calls re: impact on qualified status of plan, he finally decided to follow the plan document. It was pretty much an economic decision; it would cost less to base profit sharing contribs on total comp rather than go back and calculate "make-up" contribs, lost interest, penalties, etc., later.