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austin3515

-11(g) to Integrate at 50% of Wage Base

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IAWMP and austin.  A plan can satisfy a safe harbor that would not actually pass the general test, but these SH allocations (or DB benefit formulas) need to be stated in the plan to use the design-based SH.  If you don't have a design-based SH allocation in the plan, you have to pass the general test.  Duplicating the results of a designed-based SH is not equivalent to passing the general test.  

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Not ready to buy it yet.  The first does example does not do it at all. Yes, that is the definition of integration level in the plan, but that has nothing to say about showing that a particular allocation "scheme" meets a given integration formula that is acceptable (without a definition in the plan of integration level).

The second one is only a little more troubling than the first. I think I need Mike's reference at some point to be convinced, only because it is quite possible for IRS to take the position (on a plan with each person in their own group) that an allocation meeting the equivalent of a properly integrated plan formula is non-discriminatory.  I need to see where it says that such an allocation DOES NOT meet non-discrimination.

In fact, this quote from an earlier posting:

       From §1.401(a)(4)-2(b)(2)(ii)

                  (ii) Permitted disparity. If a plan satisfies section 401(l) in form, differences in                       employees' allocations under the plan attributable to uniform disparities                                permitted under §1.401(l)-2 (including differences in disparities that are                                  deemed  uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to                                satisfy this paragraph (b)(2).

could be read to say exactly what I am saying. The allocation meets the rules IN FORM (in the form of the allocation) and therefore does not fail a4.

Mike?

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"In form" has always meant "there is a specific plan provision".

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17 minutes ago, Mike Preston said:

"In form" has always meant "there is a specific plan provision".

Yes,  from the legal dictionary at thefreedictionary.com:

Form

The expression form of the statute signifies the language or structure of a statute, and, therefore, the restriction or command that it might include, as used in the phrase in criminal Pleading "against the form of statute in that case made andprovided."A matter of form, as distinguished from a matter of substance—with respect to pleadings, affidavits, indictments,and other legal instruments—entails the method, style, or form of relating the applicable facts; the selection or arrangement of terms; and other such matters without influencing the essential sufficiency or validity of the instrument, or without reaching the merits.

[emphasis added]

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42 minutes ago, Mike Preston said:

"In form" has always meant "there is a specific plan provision".

All right, but I still really need to see something that says you CAN'T do this.  You said the IRS has specifically said that?  Any chance of find that; my search was fruitless.

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Austin; how could I miss it?  I included it in my own posting an hour ago. In the immediate prior post to yours I said what I am still looking for; something that says what I am saying is NOT ACCEPTABLE. The other are the opposite: they are examples of what is acceptable but they do not include language that say they are the exclusive means of meeting those tests.

 

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3 minutes ago, Larry Starr said:

Austin; how could I miss it?  I included it in my own posting an hour ago.

So now you understand my sense of humor :)

Your question is "Where does it say that the integrated allocation has to be written into the Plan."

That reg says precisely that it must be in writing. Precisely.  How many trainings have we been to and been told that a plan must be qualified not only in FORM but operation?

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Well, in -2 the regs say the plan must pass either design-based SH or general test.  Under the SH language it talks about how the "plan" must allocate, with no explicit mention of the document or "form".  But it goes on to say that certain plan provisions will not violate the SH if they meet the requirements of -2(b)(4).  One of these is "multiple formulas".   Do you agree that a plan that provides for an employer determined allocation separately for each participant has multiple formulas?  If so then the plan would have to meet these requirements.  Typically a plan would not so provide.   This is over and above the specific reference to form on the integrated allocation, to apply to any design based SH, such as a points allocation. 

Quote

(vi)Multiple formulas -

(A)General rule. The plan provides that an employee's allocation under the plan is the greater of the allocations determined under two or more formulas, or is the sum of theallocations determined under two or more formulas. This paragraph (b)(4)(vi) does not apply to a plan unless each of the formulas under the plan satisfies the requirements of paragraph (b)(4)(vi) (B) through (D) of this section

 

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I think the logic works something like this: (a) To satisfy the safe harbor one must have a document provision that lays out the allocation (by definition, no plan that has everybody in their own groups with completely discretionary allocations to each individual can ever, EVER, satisfy the safe harbor). (b) In order to satisfy the general test one can utilize permitted disparity but only as specifically allowed in the general test rules under a4 (which you can find at a4-7). a4-7(b)(4)(ii) allows only one rate (it has always been 5.7%).  There is no provision to use anything other than the 100% rate (5.7%).  Never has been.

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