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Not in all instances. A high percentage may cause a failure. When you consider that the actual distributions begin with the individuals who deferred the most dollars; it may make sense to keep the percentages lowered in "some" instances. But, you do make a good point. Good Luck

Actually, "punishment" is partially correct, but also misleading. TH rules can affect small plans that are exactly identical to large plans, except for the relative number of Key EEs. Is that a logical reason to impose stronger N-D tests? A little analysis of the history of non-discrimination rules will make it clear that TH was created long before the 401a4 rules. If we had a little common sense in Washington, they would review all the N-D rules taken together, and find ways to simplify. However, those of use who have been around know that anything that goes in with the label of "simplification" comes out with the description of "complification".