2 DC Plans

[mming]

I'm not sure why, but a company has adopted 2 profit sharing plans. For good measure, the eligibility requirements are different for each plan. This results in plan 1 covering 9 ees (including the 2 HCEs) while Plan 2 allows 8 of these 9 ees (including the HCEs) to participate plus an additional ee not eligible for plan 1. At least the plans are not top heavy and their limitation years coincide.

If the er contributes 7.5% of pay to each plan would there be a discrimination issue for that one NHCE in each plan who receives 7.5% from that one plan while the other 8 participants get 15% total from the two plans?

Also, since total eligible compensation is different in each plan, how would the 15% of pay maximum between the two plans be calculated?

[AndyH]

No, you don't have any discrimination-type issues because each plan satisfies the ratio/percentage coverage test of 410(B) by itself. Each plan would need to cover no more than 70% of the NHCEs, perhaps less if you used the Average Benefits test.

I think the 15% limit is determined by taking the compensation of any participant eligible for either plan.