<Meano.Culpa[at]yahoo.com> wrote:

- quote -

Not unheard of but unlikely. You can always get a copy of
the plan documents and try to interpret these. There is not too
much an employee can do about their employer's plan limits. I
don't see where there's any decision-making required, other than for
impacted individual employees to evaluate IRA's, HSA's, or more
contributions to spousal or self-employed plans if they are available.

Steve

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A local business is dropping their 401(k) match in an expense-cutting
move. The match was the basis for the firm's HCE safe harbor.

Management has circulated a memo indicating that the contribution
limit for 2009 for HCEs will be 2% and suggesting that HCEs open IRAs.
HCEs were required to make the relevant election within 24 hours.

One of the HCEs has asked me whether the limit is reasonable. I have
no idea. The limit looks conservative (it would pass the
discrimination test if the non-highly compensated employees defer 1%
or more), but I'm wondering if the limit might have been set
artificially low to leave more pooled HCE contribution room for the
Really Highly Compensated Employees.

I'm not a tax practitioner, realize that the question is naive and
would appreciate any guidance or pointers to a good summary. Thanks
for reading.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >