401k Profit Sharing Contribution Rules

401k Profit Sharing Contribution Rules

am 10.03.2006 17:46:05 von woessner

I'm not sure if this is the right place to be posting, but here goes...

I've been tasked to investingate setting up a 401k plan at my office.
After a few lunch meetings, I'm pretty sure what we want, but I have
one lingering question. The owner would like to make profit sharing
contributions but only after 3 years of service. Is this possible or
would it likely fail the compliance tests?

As an alternative, I told him we could set it up so that an employee
would only be vested in the profit sharing contribution after 3 years,
but he said he would prefer not to make the contributions at all.

Background: We're a small research company with about 20 employees.
About half of our employees are highly-compensated. We have only 2
non-technical employees so the boss would like to keep this simple.

Thanks in advance for any advice and suggestions.


Re: 401k Profit Sharing Contribution Rules

am 10.03.2006 19:10:34 von bo peep

On average, how long has the typical employee been with the company?
How much employee turnover do you have?

A 3 year vesting period, while perfectly legal, sounds a little long
for highly compensated technical employees, especially with
unemployment being fairly low right now.

John Cowart