Minimum Deferral %

[stevena]

Can an employer amend his plan to say that the "minimum deferral percentage of pay is 5%"???

right now no limits

(dont ask the logic.........)

[Leopurrd]

I would think so - it would be an amendment to allow for deferrals from 5 to 100% of pay???

I'm basing my answer on the fact that we use the Corbel prototype and it allows you to choose the following option for salary deferrals:

from ____% to ____%

There may be requirements on notifying those who are not contributing the minimum 5%?

Vicki

[stevena]

do you think they can kick people out who are not deferring 5%?

(again, I know the logic of this makes no sense at all)

thanks for your thoughts

[Tom Poje]

rate of deferral is a 'right'.

I suspect two things would happen in such a plan.

ADP test would fail since NHCEs would not defer.

BRF could be deemed to fail effective availability. in light of the fact safe harbor 401k have a basic match at 5% deferrals, I suspect the 5% would be used as a guideline for the 'smell' test. anyone who didn't defer could be deemed as not being able to defer under the effective availability test.

[stevena]

thanks for your help