Problem with Permitted Disparity.

[R. Butler]

We use Relius 8.0. We have a top heavy 401(k) Plan. Document amended to use Match to meet top heavy. We are allocating an additional profit sharing contribution. Document provides satisfy top heavy first. We have about 20 participants. All but 2 get sufficient match to meet top heavy. When I run the profit sharing allocation the 2 first get the amount needed to meet top heavy requirements. My problem is that the Relius is factoring the top heavy contribution for those 2 into the minimum permitted disparity allocation (i.e. the top heavy contrib. to those 2 employees is 2%; base contrib. to all employees is 2%, Relius is saying maximum permitted disparity is 4%, not the 2%)

Is Relius doing that correctly? I know permitted disparity canot exceed the base. Since only the two are receiving the top heavy, I just assume that it would not be counted as part of the base

If the top heavy shouldn't factor into the permitted disparity, how do I make it quit?

Thanks for any guidance.

[Mike Preston]

There is no prohibition on imputing permitted disparity on TH contributions. Hence, if your allocation meets the terms of the plan, the permitted disparity piece appears to be fine. Whether it meets the terms of the plan or not only you can tell.

[R. Butler]

Thank you. Because only 2 actually receive the top heavy contrib. I was concerned that I couldn't use it in establishing the permitted disparity limit. Live and learn.

[Guest HFOSTER]

If you are using the Corbel document along with the Relius software I do not see how it allows to offset the 3% integrated portion first with the match. The EGTRRA amendment does not address this issue either.

Even if the document did allow the match to offset the top heavy minimum, I do not see how permitted disparity rules would be met, since those over the the wage base are getting almost 4% of compensation as a profit sharing contribution and those under the wage base are only getting 1% as a profit sharing contribution.

I tried running top heavy skim and Relius seems to still be using the match to offset contributions. If your document does not allow this what option is there on Relius????