ombskid Posted April 29, 2008 Posted April 29, 2008 Volume submitter doc has definition of comp limited to comp while a participant. The match is discretionary. They would like to have the match be the lesser of the salary deferral or x% of full year comp. Since the match is discretionary, can that be done?
BG5150 Posted April 29, 2008 Posted April 29, 2008 I would think not, since chances are the "new" people will be NHCE's, and the HCE's would get a full match but not all of the NHCE's. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
ombskid Posted April 29, 2008 Author Posted April 29, 2008 Actually the person entering mid year has the potential of a bigger match because it would be based on full year comp not just comp while a participant. The real question is can the sponsor create a match in any given year that is based on full year comp when the basic definition of comp is only that earned while a participant.
Kevin C Posted April 29, 2008 Posted April 29, 2008 What does the plan say about how the match is allocated?
ombskid Posted April 30, 2008 Author Posted April 30, 2008 What does the plan say about how the match is allocated? "the company shall contribute to the Plan on behalf of each Participant who made an elective deferral an amount determined by the board" Now that I read that again, "an amount determined by the board" doesn't have to refer to compensation.
Kevin C Posted May 1, 2008 Posted May 1, 2008 That's the section covering how the amount of the match is determined. There will be another section about how it is allocated. The allocation method will refer to the Compensation used.
david rigby Posted May 1, 2008 Posted May 1, 2008 It may also be nice to see improved grammar and/or punctuation. But most plans struggle with that. 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.
ombskid Posted May 2, 2008 Author Posted May 2, 2008 That's the section covering how the amount of the match is determined. There will be another section about how it is allocated. The allocation method will refer to the Compensation used. "in an amount determined pursuant to subsection (x)" x referring to the language above. There is no other reference to amount, allocation or compensation.
austin3515 Posted May 5, 2008 Posted May 5, 2008 IF the Plan calls for comp as a participant, then you cannot allocate the match based on full year pay. The fact that the FORMULA is discretionary does NOT affect the determination of the variables involved. Unless a really really bad attorney drafted the document, the match allocations section will indicate that the match is based on "Compensation." Austin Powers, CPA, QPA, ERPA
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