Permalink Submitted by Alan - IRA critic on Tue, 2020-09-01 19:50
The plan document must specify the type of compensation eligible for retirement plan deferrals, therefore the plan document must be checked and/or plan administrators should be asked since some plan amendments may be delayed or pending.
Permalink Submitted by Julie Bates on Wed, 2020-09-02 01:47
Thanks for the reply Alan. The SPD states “The Plan uses a definition of Compensation referred to as ‘3401(a) wages.'” Under the excluded compensation section, there is no mention of paid parental leave. The only item that it may fall under is “fringe benefits”. The plan administrator only stated to the client that paid parental leave was not eligible for 401(k) contributions, but did not specifically point to where in the SPD this stems from.
Permalink Submitted by Alan - IRA critic on Wed, 2020-09-02 02:19
Sounds like a conflict since 3401a wages would include paid parental leave. Therefore, if these payments are stated not to be eligible for contributions, that suggests a recent change that is not yet reflected in the plan document. Client should press further for an explanation of why they are being told these payments are not eligible.
Permalink Submitted by Alan - IRA critic on Tue, 2020-09-01 19:50
The plan document must specify the type of compensation eligible for retirement plan deferrals, therefore the plan document must be checked and/or plan administrators should be asked since some plan amendments may be delayed or pending.
Permalink Submitted by Julie Bates on Wed, 2020-09-02 01:47
Thanks for the reply Alan. The SPD states “The Plan uses a definition of Compensation referred to as ‘3401(a) wages.'” Under the excluded compensation section, there is no mention of paid parental leave. The only item that it may fall under is “fringe benefits”. The plan administrator only stated to the client that paid parental leave was not eligible for 401(k) contributions, but did not specifically point to where in the SPD this stems from.
Permalink Submitted by Alan - IRA critic on Wed, 2020-09-02 02:19
Sounds like a conflict since 3401a wages would include paid parental leave. Therefore, if these payments are stated not to be eligible for contributions, that suggests a recent change that is not yet reflected in the plan document. Client should press further for an explanation of why they are being told these payments are not eligible.
Permalink Submitted by Julie Bates on Wed, 2020-09-02 04:19
Understood, thank you for your guidance. I’ll circle back with additional information as I have it.