Two plans--which get TH Contrib

[BG5150]

Company has two plans (A) 401k/Match (B) Profit Sharing.

Together they are top heavy (and individually, too).

Plan (B) states the TH will be made to Plan (B)

Plan (A) is silent on the issue.  The section in the Adoption Agreement does not even mention the existence of the other plan, it's entirely blank.

Does that mean technically the TH is due in BOTH plans?

[Belgarath]

Have you checked the "boilerplate" top heavy section on the body of the document in (a)? If a pre-approved plan, it will almost certainly address this in some manner, although it may just refer to the adoption agreement! However, without knowing anything about the specific language involved, my initial thought is that as long as (b) provides the requisite TH for all participants in either plan, it should be sufficient, assuming there is any wiggle room in the (a) document language. Even if there isn't, the Plan Administrator is responsible for interpreting the document, and perhaps their interpretation would be elastic enough to avoid a second TH contribution in the (a) plan.

Good luck.

[BG5150]

I don't have the BPD for (A).

The BPD for (B) [Datair] says that the participant does not have to get the allocation if they are in another plan and the ER has provided in the AA that the minimum will be met in another plan.  I am guessing that (A)'s doc is similar.

I'm not THAT concerned, and I think it would take an overly-zealous investigator to suggest the TH is actually due to both plans.  No one is getting jipped here.

[Bird]

I know the world's not a perfect place but if you are running both plans I don't think you can do so properly without the BPD for Plan A.  Ultimately, that will provide your answer.  If you're not running Plan A (and I'm not sure I have ever been or would be in that situation) I suppose you can punt.  From what you are saying Plan B absolutely must provide the TH min.  I'm not sure it's so technical that Plan A doesn't have to.  Sounds like a bad or poorly drafted document.

[BG5150]

We don't do Plan A.  It's with Globo-Payroll.

[Larry Starr]

3 hours ago, BG5150 said:

We don't do Plan A.  It's with Globo-Payroll.

We don't do a plan unless we do all the plans of the employer.  Too many things to slip through the cracks.

[Belgarath]

Agree with Larry, although we've made exceptions on rare occasions, and generally have deeply regretted it!

[Bird]

19 hours ago, BG5150 said:

We don't do Plan A.  It's with Globo-Payroll.

Then the question arises - will Globo-Payroll allocate TH minimums in their plan anyway, and are you in a position to tell them they don't have to?  I wouldn't want to be on record making that assurance.  The dynamics of this situation are "interesting."  

[BG5150]

The payroll company did calculate the TH minimum and related that to the company via the annual report.  (However, I'm not sure if the match was calculated correctly, so the TH numbers are suspect.)

[david rigby]

You've been given a gift: an excellent consulting opportunity.  Talk to the plan sponsor, briefly outline the issue (TH tests on a separate basis are meaningless, it's important to know what's in each document) and offer to fix the problem(s).  This might mean one or more plan amendments, or it might mean just reading both plans carefully and documenting what has happened/should happen.  If you discover that (at any time in the past) a double TH contribution has been made, that is an opportunity for you to expand your service to this plan sponsor.

If you don't want this consulting opportunity, others will be glad to do it for you.  ?