Employee works for 2 members of controlled group, defers through one employer.Full comp. or not.

[Lori H]

Employee receives a salary from Company A and a substantially higher salary from Company B. Company B has adopted A's plan. The employee only defers through B. No deferrals on wages earned from A. At the end of py it was determined based on combining wages from both companies, her match was underfunded. Question: Are you required to combine the compensation for both companies? I believe so, i just need some reassurance. Companies are a controlled group and utilize one plan doc.

[david rigby]

Sounds like a question that must be determined by reference to plan provisions, especially definitions. But I could be missing something.

[Lori H]

well, the document defines comp as section 3401(a) comp with no exclusions. i would assume if two employers were covered by one plan you would use total comp earned under both employers for the defiinition of comp, even if a participant elects to defer under one employer and not the other.

[Lori H]

match is made each payroll period, not at the end of plan year. employer thinks since participant elected not too sign up thru one employer, that comp should not be calculated in year end reconciliation of match.

[austin3515]

Is she only one payroll at a time? OR does she receive pay from both companies all year?

Assuming thatt the document indicates that the match is calculated each pay-period, and that she receives pay from one company at a time, then I'd say you could exclude comp from the other company in the match calculation.

Otherwise, I think it's in based on a literal interpretation of your document.

[Tom Poje]

there are some confusing terms being used - if this is a controlled group, then you really have only '1' employer, with two companies not an ee working for 2 different employers - or at least that is how I understand things.

now w/o digging into the current regs the new regs

1.401(k)-2(a)(ii) says ADR of an HCE who is an eligible employee in more than one arrangement of the same employer is calculated by treating all contributions of that HCE under ANY arrangement as being made under THE PLAN being tested.

I'm willing to yield to someone who has more experience with controlled groups, but this sounds like it could get ugly.

my own opinion, if the match is on a payroll by payroll basis I don't see how anyone gets a true up.

If the match is only done on a payroll basis simply to spread out the match rather than one big sum at the end of the year then I think its clear as mud - mainly to prevent one from playing games with comp in regards to testing, etc.