I've seen many defined contribution plan documents that describe the steps in allocating employer contribution when the plan is integrated. All the documents I've seen used " 2.7% " in one of the steps. It seems that " 2.7% " is standardly used.

But lately I've seen a couple of plan documents that use "2.4%". Integration in one of those plans was tied to 80% of the FICA base. So I assumed that the 2.4% came from 80% x 3% = 2.4%. But another plan document used 2.4% and made no metion of 80%.

My Question: Apparently 2.7% is not the standard that must be used all the time. So how is the 2.4% derived? When can 2.4% be used? Are any %'s allowed other than 2.7 and 2.4 ?

Moe, you may have been looking at top heavy plans that allocate the 3% top heavy contrib first. So for a plan integrated at 100% of the TWB, 5.7% is reduced to 2.7%. Max disparity for a plan integrated at 80% of the TWB is 5.4%, so 5.4% - 3.0% = 2.4%.

mav: What is max disperity for a plan integrated at 70% of the TWB ?

If the integration level is greater than 80% but less than 100% of the TWB, the 5.7% must be reduced to 5.4%.

If the integration level is greater than the greater of $10,000 or 20% of the TWB, but not more than 80%, 5.7% must be reduced to 4.3%.