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Excluded Employees and Defined Benfeit plan

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A client is looking to set up a Defined Benefit plan to maximize benefits for two partners.
There would be 8 eligible employees - 4 HCEs (two 50% owners and two by attribution) and 4 NHCEs (two of whom are on average 10 years older than the owners) and the formula would be something like 60% of pay less the TRA offset.
The proposal the client is looking for is to have the DB plan covering only the two owners (excluding the other HCEs) and the two younger NHCEs (though they would obviously eliminate the two older NHCEs by job description rather than age).
410 and 401(a)(26) look like they pass but would appreciate any feedback on other possible issues.
Also, would there be other issues if they had an ongoing 401(k) with the 3%-of-pay nondiscretionary safe-harbor with all 8 participating? Would nondiscrimination testing be necessary?
Thank you.

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Unless the DB formula was a safe harbor then yes, you have NDT (what is TRA offset?).

The two non-Key employees that are in both plans would need to get 5% TH in DC assuming that plan provides the TH.

You also have a combined plan tax deduction limit if they are professional services.

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If you are relying on the average benefits test to satisfy coverage, remember that the classification must be reasonable. Classification by job title is reasonable but if the IRS finds that you have a de facto classification by name or other unreasonable method it could be disallowed.

CuseFan - I think "TRA" refers to the Tax Reform Act of 1986 and "offset" as in an offset plan, where the benefit is reduced by an amount integrated with social security. I'm going to assume that offset plans were added by TRA '86 - it sounds right to me but I wasn't around back then.

I assume you already looked at a cross-tested DC/DB combo design? Usually that would be more efficient if your goal is to maximize the benefit for the owners.

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