Profit Sharing Contribution Allocation Eligibility

[Guest 401KTPA]

Does anyone know if there is a reg that states that participants who have retired, are disabled or deceased during the plan year are entitled to the profit sharing contribution for that plan year?

We have a client disputing this with us. There document states the usual 1,000 hours and active on last day of plan year but not the above exceptions. This is how we have always processed profit sharing plans.

Their attorney is away for a week so if anyone can help I'd appreciate it.

Thanks

[QDROphile]

So are you going to get your law degree and be admittted to practice this week so you can substitute for the lawyer?

There is a special class in law school about the legal doctrine of "because we have always done it this way." The New York law firms in particular make use of the doctrine. TPA firms also rely on it heavily when advising clients about what is required. That doctrine allows TPAs to say that the law requires elective deferrals to be suspended after a hardship distribution.

Sarcasm aside, you did things right. You checked the plan document and you did not presume that your practice is mandated by law.

While it is a common plan design to make some exception along the lines you have described, it is not required by law.