Carpenter Morse Group
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Central Pension Fund of the IUOE
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Prime Pensions, Inc.
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Retirement Plan Legal Specialist Pentegra
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Nova 401(k) Associates
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Jr Retirement Plan Administrator/ Administrative Assistant Hochheiser Deutsch & Co, Inc.
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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Trucker Huss, A Professional Corporation
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United 401(k) Plans, Inc.
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Nicholas Pension Consultants
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Bates & Company
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Central Pension Fund of the IUOE
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Compass Retirement Consulting Group, Inc.
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Retirement, LLC
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Question 196: A PEO has operated a 401(k) plan as a single employer but intends to convert to a multiple employer plan within the timeframe of Rev. Proc. 2002-21. It will be a 401(k) with a safe harbor match. The COs will have the option of making a non-elective contribution, allocated in proportion to compensation. Is this a uniform allocation formula, or will general nondiscrimination testing need to be performed? Some worksite employees are highly compensated, and Rev. Proc. 2002-21 does not clearly resolve the issue of who is the employer... so how can any such testing be done with confidence? | |
Answer: You've put your finger on a very important issue. Let me give a simplified example to demonstrate the issue.
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Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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