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Compensation Test


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Guest MEWilson
Posted

What happens if the plan fails compensation test for excluded comp?

Posted

well, it depends - especially what you are referring to.....

see 1.401(a)(4)-(4)(e)(3)(iii)(D and F) Benefits Rights and features

"...based on the plan's definition of compensation....regardless of whether that definition satisfies section 414(s)...

so BRF doesn't appear to care

If you have a 'safe harbor' formula (e.g. integrated at 5.7%) then you have 2 choices

amend comp defintion to keep the status of the safe harbor plan or

test the plan just like you would if the plan was cross tested, but using 414(s) comp rather than the plan's definition of comp.

Guest MEWilson
Posted

Thank you Tom.

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