Controlled Group-Lost Opportunity

[Guest Kevin1]

I have the "opportunity" to take over a 401(k) plan using the safe harbor match. The issue is that the employees of another business owned 100% by the plan sponsor have not been offered the chance to participate in the 401(k) plan. No other employer contributions are made to the plan.

Looks like the employer is responsible for certain employee and corresponding matching contributions and a EPCRS filing, correct? Any way out?

[rcline46]

410(b)? SLOB?

[Guest Kevin1]

No joy. there's only about 25 total employees. All the ones in the other company are NHCE.

[david rigby]

Does it fail 410(b)?

[Guest Kevin1]

Yes, it fails.

[david rigby]

Isn't 410 a qualification requirement?

This "opportunity" might smell.

[austin3515]

Because it sounds like you know what you are talking about, I'll presume that the 410(b)(6)© grace period has expired?

How about a bottom-up -11(g) profit sharing contribution to get the average benefits test to pass (assuming you meet the nondiscrim ratio percentage threshhold)? If the NHCE's are young, some profit sharing for them might do the trick to pass the average benefits test. Not sure how far back you are going with this (-11g deadline is 8.5 months after year-end)

I may be speaking out of turn, as this would be quite aggressive, but it might be worth asking an ERISA attorney... The Bottom-up restrictions do not apply to profit sharing contributions - only the ADP test...