JKW Posted April 1, 2024 Posted April 1, 2024 I have a 457b plan that is changing its eligibility going forward. And one of the current participants will no longer meet the criteria. Can that participants still contribute and keep balance in the plan b/c he met eligibility previously?
CuseFan Posted April 1, 2024 Posted April 1, 2024 Governmental? - I'd say it depends on what the plan ultimately says concerning that situation, and if it hasn't happened yet, a good opportunity to consult and make sure that it does address the situation. Tax-exempt top-hat? - Same as above UNLESS the change concerns who the employer is considering as select management or highly compensated, in which case the employee should no longer participate if the employer deems no longer a top-hat eligible employee. Luke Bailey 1 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
Carol V. Calhoun Posted April 1, 2024 Posted April 1, 2024 The individual should continue to have a balance -- you can't simply take that away. But as to future participation, I agree with @CuseFan. Luke Bailey 1 Employee benefits legal resource site The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.
CuseFan Posted April 1, 2024 Posted April 1, 2024 33 minutes ago, Carol V. Calhoun said: individual should continue to have a balance absolutely, should have reiterated that in my response, thanks Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
JKW Posted April 2, 2024 Author Posted April 2, 2024 @CuseFan the plan Top hat -and is changing the compensation minimum to participate and the person is below that limit. So sounds like he can keep the balance but not contribute in future. Thanks for info.
Luke Bailey Posted April 10, 2024 Posted April 10, 2024 If the employer determines that the person is not top-hat eligible, it should probably distribute the balance to the employee. Even if it does that, I think the jury is out on whether the plan will ever be a good top-hat plan or instead is permanently "tainted" as an ERISA-violating unfunded non-top-hat plan. At least, I'm unaware of guidance or a case on the issue. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034
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