AndyH

Excellent explanation. p.s. I did not mean to imply that a monthly table is merely an annual table divided by or multiplied by 12, just that I often see age weighed PS plans where the unit or factor is merely 12 x or 12/ the unit in another.

yes, but I think it's nothing more than one equals the other times 12, so it makes no difference except maybe in the rounding.

Thanks, Ken. As I remembered, very good discussion. But I'm still not sure of the answer! Calling Mike.....

Mike, if I understand your opinion on this, then I think that it has changed in the last 2 years. There is a prohibition somewhere in the a(4) regs (I have not looked it up today) to reliance upon a repeated pattern of 11-(g) corrective amendments within the context of B, R, F which we discussed here a couple of years ago and my recollection is that you stated that you tended to interpret that prohibition more broadly than just B, R, F. But even Bill Parcells reserves the right to change his mind! But chris4013, if you are forced to choose between my opinion and Mike's, .............don't choose mine!

Thanks. I agree with #2 but I'm not sure about #1. I remember prior discussion of this, but not the outcome.

And I think you'd be hard pressed in an age-based PS plan to justify giving someone older (as a pct of pay) less than someone younger without it being considered discriminatory, so even if you had a plan that had a lower factor for someone past age NRD I'd change it or stretch an interpretation if necessary to prevent that. And I know this happens in (non-safe harbor) targets and db plans but I still don't like it in an age based PS setting. Just one opinion.

Would you point us to it please?

Fred, it is possible that such a plan provides either a lesser contribution to a 66 year old than a 65 year old, a greater contribution, or the same contribution. Your question is plan-specific.

Unless your prototype somehow prohibits it, yes. You would be aggregating the two plans for both 401(a)(4) and 410(b) purposes and testing both together for essentially all purposes.

You can probably use the otherwise exludable rule but we cannot say for sure without knowing what the document says.

yes to both

Blinky, megga dittos. Reading this thread, I had the exact same reaction that you did.

I think you can do what you suggest but I think it is abusive and advise against it.

You would/could still test the partners plan as stand-alone for 401(a)(4) purposes, but all the non-partners who have met the statutory age and service requirements would be 0%s, so unless some of them are HCEs then it will be difficult to pass 401(a)(4). You will aggregate both plans by necessity in the Average Benefits Percentage Test if any rate group does not have a ratio/percentage of 70%. But that may help, not hurt. The tough part will be getting each rate group to equal or exceed the mid-point under the Nondiscriminatory Classification Test portion of the 401(a)(4) test.

Right. cythiar, a plan could have language that says that all eligible employees shall receive the lesser of 1/3 the highest % of pay allocation to any HCE or 5% of pay. And assume that plan had only a 3 month wait for eligibility. So then how would you exclude an "otherwise excludable" from getting the allocation? I don't think you could, only because of the language in the document.

That is an interesting comment about the document. That could be easily overlooked.

ok, sorry, I misread your question. I agree. To my knowledge this is not permitted.

QDROphile, why is that so? I'm just curious. Are taxes different than a fee charged by an investment manager, i.e. an investment expense? I once had a DB plan that held raw land audited. The sponsor had been paying the taxes. The auditor said that in such case the tax payments should be treated as contributions to the plan. We accepted that statement and changed how this was handled go-forward, but I always wondered if that was correct. Is there something different about taxes?

To start with, contributions that were deducted by the emploer would be disallowed.

Agreed, I was just trying to keep it simple to start with.

You'd need to include 2 NHCEs in one component with 1 HCE and the other 3 with the other HCE in the second component. Each component plan would pass ratio/percentage, one at 100% and the other at 120%. And one component would get the same % of pay and therefore that passes (a)(4) on a contributions basis. You just need to get the other to pass on a benefits basis. One HCE with the two youngest NHCEs, or even 3 should do it.

If you are aggregating them for a(4), I think so, unless the combined plan is primarily DB in nature, the result of the test outlined in the regs.

????? If it's not a safe harbor 412(i), then it's not a 412(i) at all, right? And then you must general test with or without another plan. So if it aggregated with a DC, then it longer "passes" the 412(i) safe harbor, but that doen't mean it can't pass 401(a))4).

Yes, each component must pass coverage. If they don't each pass R/P, then they must pass the average benefits test, which includes the requirement that the eligibility be reasonable based on objective business criteria, not just for the HCEs, but for whoever else is included in each component. But why can't you pass R/P? How many HCEs and NHCEs do you have?

I think the answer is no because the plan is not qualified under 401(a). Have you found anything that contradicts this?