Leaderboard

your cape must have flown in front of your eyes. He said the plan terminated in 2018, but you make a good point for on-going plans

if the NHCEs quit with less than 500 hours then they could be excluded, but otherwise I don't see an out

Well, first of all, new comp is really a testing method, not a type of plan (although some adoption agreements may even say "new comp allocation" but if you look closely, it doesn't, or shouldn't, force you to use new comp testing). In other words, you can have "everyone in their own group" and allocate whatever you want (subject to testing) and then either test on a contributions or benefits (new comp) basis. That type of plan tested on a contributions basis would allow for contributions that look just like they were allocated on a PD method (at 100% of wage base) but you could easily exclude an HCE as you want to do here.

How can anybody in this day and age have a TPA and a permitted disparity plan?

It's all or none. You cannot 'elect' out of a 'nonelective' contribution; especially when the plan has a uniform allocation formula. Good Luck!

From the regs under 1.415©-1 (B) Date of employer contributions. For purposes of this paragraph (b), employer contributions are not treated as credited to a participant's account for a particular limitation year unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) applicable to the taxable year with or within which the particular limitation year ends. If, however, contributions are made by an employer exempt from Federal income tax (including a governmental employer), the contributions must be made to the plan no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year (as applicable, depending on the basis on which the employer keeps its books) with or within which the particular limitation year ends. If contributions are made to a plan after the end of the period during which contributions can be made and treated as credited to a participant's account for a particular limitation year, allocations attributable to those contributions are treated as credited to the participant's account for the limitation year during which those contributions are made.