benefits, rights and features?

I don't know how many times I have mentioned to different clients (mostly doctors) that they can not make employer contributions during the year and wait until 9/15 of the following year to make employer contributions for the NHCE participants.

Need cite, please.

There is no specific cite.  It's merely saying that you cannot operate the plan in a manner that would provide an advantage over the Owners or HCEs that is not provided to the NHCEs.  Arguably, it's discriminatory.

Let's suppose a doctor has $80K sitting in the plan during year and you deposited $20K into his account during the year.  Now, the doctor $100K, of which he can take a $50K loan.  Prior to that deposit, he could take only $40K as a loan.  Given this simple deposit, his loan availability under the plan has increased by $10K by the deposit.  At the time time, the NHCEs didn't receive this advantage.  Is there a rule that says "you must deposit the NHCE money at the same time you deposit the HCE money"?  No, there is no such rule.  But, this type of inconsistency "MAY" be challenged as making benefits, rights, & features available to HCEs that aren't being made available to NHCEs.  

This is merely a hypothetical. 

Good Luck!

As well as worth mentioning (in writing of course) to the client.

TX.

4 hours ago, thepensionmaven said:

I don't know how many times I have mentioned to different clients (mostly doctors) that they can not make employer contributions during the year and wait until 9/15 of the following year to make employer contributions for the NHCE participants.

Need cite, please.

There is no specific cite; the IRS in Q&A sessions has said that it is a violation of BRF rules, since the benefits are no longer "equal".

See Treasury Regulation 1.401(a)(4)-4, Nondiscriminatory availability of benefits, rights, and features. Be sure to look at (b) "Current Availability" and (c) "Effective Availability" as these are both required to be met to satisfy the requirement.

Not to mention the interest (or unrealized appreciation) advantage the HCE has by having the money in his account much earlier than the other NHCEs.

I would also consider this a potential prohibited transaction, since i assume the "Doctors" are either "named" or "functional" fiduciaries, and this decision sure sounds like self-dealing for their own benefit.  

It is not a pt.

The argument that others have made (and I agree) is that when employer contributions are paid is an "other right or feature" defined in Treas. Reg. Section 1.401(a)(4)-4(e)(3)(I) where none of the exceptions in (ii) apply.  If it is available to a group that skews toward HCEs, it will fail the current availability test for a benefit, right or feature in Treas. Reg. Section 1.401(a)(4)-4(b).  Those are the provisions that the original poster will need to cite to his/her clients.