Plan Design

[Guest WCHB]

Client has many (over 2,000 employees). They have no age limit/12 month/1000 hour eligibility with dual entry dates. They do not want to change any of the above. It is a fast food chain so they have a lot of terms and rehires with about 900 eligible. They have requested a plan design that would help with the testing situation. Of course, we have offered auto enroll and safe harbor but they turned that down. The situation is that most of the employess only make minimum wage or a little more so participation is small. They have deferral and match refunds every year but since the economy has went down it is worse. Any plan design suggestions? All help is appreciated.

[K2retire]

We had a similar client who had auto enrollment. Because of the turnover, it was a disaster. Adding an age requirement might help, but probably won't solve the problem. A safe harbor matching formula is really their best option.

[Guest WCHB]

We had a similar client who had auto enrollment. Because of the turnover, it was a disaster. Adding an age requirement might help, but probably won't solve the problem. A safe harbor matching formula is really their best option.

Projections showed it to more than double their expense so they refuse.

Is there a design that can "carve out" certain employees such as cooks/cashiers, etc. that will pass all non-discrim testing that you are aware?

Thanks again.

[Guest ERISA01142002]

We had a similar client who had auto enrollment. Because of the turnover, it was a disaster. Adding an age requirement might help, but probably won't solve the problem. A safe harbor matching formula is really their best option.

Projections showed it to more than double their expense so they refuse.

Is there a design that can "carve out" certain employees such as cooks/cashiers, etc. that will pass all non-discrim testing that you are aware?

Thanks again.

In order to pass coverage testing, you would need to satisfy the ratio percentage test or the average benefits test. The minimum amount of non-highly EEs that need to be covered would be at least 70% of the HCEs covered. Cooks/cashiers would be an acceptable exclusion for these purposes. The amendment could not, of course, be retroactive.

[Guest WCHB]

We had a similar client who had auto enrollment. Because of the turnover, it was a disaster. Adding an age requirement might help, but probably won't solve the problem. A safe harbor matching formula is really their best option.

Projections showed it to more than double their expense so they refuse.

Is there a design that can "carve out" certain employees such as cooks/cashiers, etc. that will pass all non-discrim testing that you are aware?

Thanks again.

In order to pass coverage testing, you would need to satisfy the ratio percentage test or the average benefits test. The minimum amount of non-highly EEs that need to be covered would be at least 70% of the HCEs covered. Cooks/cashiers would be an acceptable exclusion for these purposes. The amendment could not, of course, be retroactive.

Thanks, I thought about that; my next thought was to have two plans. Plan A will be a mix of HCEs and NHCEs while the workforce covered under Plan B will consist only of NHCEs - Plan B would automatically pass coverage since it covers only NHCEs. If Plan A passes coverage standing alone, when including all of the employees in Company A in the test, it would not need to be aggregated with Plan B to pass coverage. Plan A and Plan B would be aggregated for non-discrimination testing (ADP/ACP) only if the plans must be aggregated for Plan A to pass coverage.

If Plan A passes coverage standing alone, Plan A and Plan B would not be aggregated for non-discrimiantion testing.

Your thoughts?

[Leopurrd]

what about allowing only nhce's to participate and setting up a nonqual for the hce's??