Revisiting the issue of a New Comp Plan avoiding being designated a CODA

[CharlesLeggette]

This is another mutual client of same lawyer we discussed on another earlier post who is paranoid re CODA.

So here is the procedure for a Plan with 70 docs and 650 employees…

FACTS:

Thru 12/31/2015 they are a 401(k)/PSP SH 3% Non-elective – last day requirement for non-SH $$, allocation method was Integrated at TWB. No matching –just PS contributions.

PS contribution for 2015 will be about 17% of pay for docs and 15% of pay for staff, limited by 415 and catchup, depending on their deferral.

We know we could have fired up a new 2015 PS Plan and made new-comp contributions over there, but they elected to just move on and leave 2015 alone.

For the last 25 years they have always contributed 15% of staff pay – IOW, a very generous employer.

Effective 1/1/2016, docs no longer make deferrals except for $6k catchup…no longer have Safe Harbor, Safe Harbor discontinuance notice sent on 12/1.

Every participant in their own rate group.

We are Named Fiduciary of Plan under a 3(16) agreement crafted by our attys in concert with their atty.

Procedure for Setting the amount of Individual Doc PS New-comp contribution for 1/1/2016-12/31/2016:

We will calc the estimated 2016 equivalent PS amount that approximates the 2015 deferral+Integrated ps contribution - $6,000 catch-up, if applicable, IOW, the $xx amount per doc.

We will craft a recommendation to the Board Benefit committee[there is no Plan Level Committee since we are the Named Fid.] with a list of docs and the $xx amounts per doc.

We will send an email to the docs saying that $xx is the amount that will be credited to your account in 2016 and $yy is maximum permissible amount assuming your comp stays at $zz.

The doc notice will say that if they want to petition the Benefit Committee for a different amount, they must do so in 30 days. They need give no reason or rationale for such a petition.

Once the 30 days elapses, the Benefit committee will review all estimated contributions and petitions, if any, approve or deny them[we have no say in this matter].

The Benefit Committee will then send the gross amount of the expected employer contributions to the board for approval[no individual numbers].The benefit committee will then notify us of the amounts [which are an approximation].

We will communicate the doc amounts to the client’s accounting/payroll department.

We are done until end-of-year.

Does anyone believe this procedure will tag our client as being a CODA?