Adopting Employer

[Rai401k]

A CLIENT OF OURS HAS THE FOLLOWING MATCH FORMULA BASED ON YEARS OF SERVICE

1 Year of service: they match 33.33% of a participants annual deferral amount up to 6% of annual compensation.

5 Years of service: they match 66.67% up to 6% of annual compensation.

10 Years of service: they match 100% up to 6% of compensation.

They now have an Adopting Employer Effective 1/1/05.

They want the employees from the Adopting Employer Company to receive 100% match immediately (basically as if they worked with the company for 10 years) but any new employees hired after, or any current employees of our clients are still subject to the wait. Is this discriminatory

[QDROphile]

Why do you care?

[SoCalActuary]

Without a safeharbor match, how does this affect the ACP test?

Is the adopting employer more likely to have HCE's (like the owner's relatives?)

You could amend the document to provide named individuals with a different match formula, or you could specify that the adopting employer has a different match.

However, if any of the new adopting employer's people did not actually have 10 years of service, you ought to test for benefits, rights and features.