Guest rustymonty Posted March 23, 2005 Posted March 23, 2005 Can a SPD be amended to only include compensation such as salary and not include, commissions, bonuses, etc.
Guest Midas Posted March 23, 2005 Posted March 23, 2005 A Plan Document can be amended to change the definition of compensation to exclude those items. A SPD can then be updated to reflect the amendment to the Plan Document. A change to the SPD is meaningless without an actual amendment to the Plan Document.
WDIK Posted March 25, 2005 Posted March 25, 2005 A change to the SPD is meaningless without an actual amendment to the Plan Document. Unless you are the Third Circuit. ...but then again, What Do I Know?
Lori Friedman Posted March 25, 2005 Posted March 25, 2005 But, aren't there some nasty consequences of excluding bonuses, commissions, overtime, etc. from the definition of compensation? Wouldn't this fall outside of the Sec. 401(a)(4) safe harbor and result in some extensive plan testing? Example. Use only base salary as compensation. HCE pays himself a $100,000 salary and a $5,000 bonus. A NHCE's pay is structured as $15,000 base pay plus $25,000 bonus. A 10% profit sharing contribution provides $10,000 to HCE but just $1,000 to NHCE. These contributions don't bear a uniform relationship to Sec. 414(s) compensation. Lori Friedman
Guest Midas Posted March 25, 2005 Posted March 25, 2005 WDIK- If there are some cases that you are aware of that outline that the SPD trumps the plan document in operation, please share. Lori, yes, you are correct. Excluding bonuses and overtime from the definition requires a compensation test to make sure the definition satifies 414(s).
david rigby Posted March 25, 2005 Posted March 25, 2005 ... but a compensation test is usually very easy to perform. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
WDIK Posted March 25, 2005 Posted March 25, 2005 WDIK- If there are some cases that you are aware of that outline that the SPD trumps the plan document in operation, please share. I thought that was what I did with the link. (Click on the underlined Third Circuit) P.S. Apparently other circuits have made similar rulings. ...but then again, What Do I Know?
Guest Midas Posted March 25, 2005 Posted March 25, 2005 WDIK - Thanks. Good information!! I still think the proper advice for rustymonty is to amend the plan document then update the SPD.
WDIK Posted March 25, 2005 Posted March 25, 2005 I still think the proper advice for rustymonty is to amend the plan document then update the SPD. I certainly agree. ...but then again, What Do I Know?
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