Final regs say deferrals are treated as Employer contributions under IRC 404 - ? Also need help finding certain provisions in final regs.

[Guest LMalone]

My eyes have glazed over reading the final regs. Three things:

Item #1------ 1.401(k)-1(a)(4)(ii) - "Treatment of Elective Contributions as Employer Contributions" - states that deferrals are treated as employer contributions under IRC 404. I thought EGTRRA changed this. How is this applied?

Item #2------ Same cite says deferrals are treated as employer contributions under IRC 411. Some comments say this means that a participant who is zero vested in Employer contributions but has made deferrals is not treated as non-vested for purposes of rule of parity for vesting. Even if this is so, does this also apply for rule of parity for eligiblity as well?

Item #3------- Taking this further to the deemed cashout provision, is this to be interpreted that in the case of an employee who has deferred, but is zero vested in Employer contributions, such employee's non-vested Employer contributions may not be forfeited immediately upon termination if the deferrals remain in the plan?

Thanks for any help in sorting this out.

[WDIK]

With respect to item #1, I do not think the language of 1.401(k)-1(a)(4)(ii) implies that IRC 404(n) is no longer applicable.

[Tom Poje]

I think the preamble sums it up in plain english:

D. Requriement that elective contributions be immediately forfeitable

last sentence: Thus, for example, elective contributions under a qualified CODA ARE taken into account for purposes of determining whether a participant is a nonvested participant for purposes of section 411(a)(6)(D)(iii)

[that is, the break in svc rules] emphasis is mine.