Not sure what forum to post this question in, so I'll start here:

We are taking over a prevailing wage plan (no other contributions go into this plan, they have a separate 401(k) Plan that addresses other money types). I haven't done one of these in many years! This is probably a dumb question, but I'll ask it anyway.

The existing plan document has no age / service requirement to enter the plan (whew!) but has a 1,000 hour requirement to receive a davis-bacon contribution. If the participant doesn't work 1,000 hours during the plan year, the davis-bacon contributions get paid to the employee directly (through payroll), and don't run through the plan. Is this ok? I was under the impression that there can't be an accrual requirement to receive an allocation in this type of plan.

Any input on this would be greatly appreciated.

Thanks!

Davis Bacon plans typically have no age/service/entry/vesting barriers because the plan sponsor saves significant $$ by converting compensation dollars into benefit dollars (no workman's comp, no FICA). Why your plan put up a barrier is anybody's guess. Maybe there are too many folks with very small hours and the administration costs exceed the savings? The DavisBacon Act requires that the plan sponsor spend a certain amount on benefits or provide it as compensation. If the plan provides a barrier, then compensation is what results. Might be very bad plan design. Might be very good plan design. Not enough facts.