Plan Design- group determination

[Guest Lex]

Here is a plan design we are considering- please offer your input. Your feedback is appreciated.

The allpcation groups will be determined based on a points system- participants will receive points for age and service. The Groups will be tiered. Group A consist of all those with points ranging from 25-30. Group B consists of all those with points from 20-25; etc.

To staisfy the gateway, all groups will get a min. 7% contribution.

Group A will get 5% in addition to the base contribution. Group B will get 5%; etc.

In addition to your thoughts on this design, the employer wants felxibility on the amounts above the 5% min. each year, as profitability will be a factor.

Any problem with that not qualifying as a definately determinabel formula?

[AndyH]

No. The allocations given to each group can be completely discretionary if the plan is set up properly. The document must define how each group is determined and must state that the employer has the right to separately determine the contribution to each group.

The allocations must still pass the general test, however. You haven't given any information that would indicate whether passing is likely, other than with the high contribution levels it would be more likely to pass.