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Subject:  Re: 401k problem Date:  12/2/2006  2:56 PM
Author:  DeltaOne81 Number:  54588 of 88501

Our problem is that there are not enough of the rank and file staff members participating. The Docs are a separate organization, as well as the nurses. I'm all for mandatory enrollment.....

Yes, however, if you do enough matching, you are exempt from needing to pass that test (then again, matching will also help the 'rank and file' participate more).

If you do either of those, you are given a pass on the 'nondescrimination' tests.

(12) Alternative methods of meeting nondiscrimination requirements
(A) In general
A cash or deferred arrangement shall be treated as meeting the requirements of paragraph (3)(A)(ii) if such arrangement—
(B) Matching contributions
(i) In general The requirements of this subparagraph are met if, under the arrangement, the employer makes matching contributions on behalf of each employee who is not a highly compensated employee in an amount equal to—
(I) 100 percent of the elective contributions of the employee to the extent such elective contributions do not exceed 3 percent of the employee's compensation, and
(II) 50 percent of the elective contributions of the employee to the extent that such elective contributions exceed 3 percent but do not exceed 5 percent of the employee's compensation.

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