Partnership 401(k) + Discretionary Contribution

[Guest johnpetrancosta]

We have a partnership with 4 partners: A = 28.33%, B=28.33%, C=28.33% and D=15%. The Plan is a 401(k) with a 3% to all eligibles safe-harbor. The plan also makes a discretionary contribution.

My question has two parts:

Partner C does not make deferrals, nor does he want any of the discretionary contributions. Being a Partner, he either wants to build his capital account or take the equivalent distribution in cash.

1. Are Partners allowed to opt out of receiving their contributions on a year to year basis?

2. What documentation should be put in place?

[QDROphile]

No option on year-to-year basis for nonelective contribution. Where the line is drawn on what constitutes a cash or deferred election is uncertain, but year-to-year is on the wrong side of it. Partner C can be excluded from nonelective contributions, subject to discrimination limits if Partner C is not an HCE.

[austin3515]

I think QDRO answered step 2 - step 1 is, does the plan have separate allocation groups for each partner? If the answer is no, then there is no way at all pull this off.

If the answer is, yes, then go to step 2

[Guest johnpetrancosta]

Thank you both.