Imputing Disparity

[Guest dietpepsi]

I was wondering if anyone would have an opinion on the following....If a plan sponsor has both a DB plan and a comparability plan and the DB plan is intergrated with social security, should I not use imputed disparity results in the general test for the comparability plan?

And, would the same apply for an average benefits test? For example, let's say the employer has a DC profit sharing plan with an integrated formula but they are not covering enough people to pass the ratio percentage test. When the ABT is completed, should I not use imputed disparity?

Thanks!

[Tom Poje]

Imputing disparity is an option, you never have to use it. However, if you have more than one plan, you can only adjust the E-Bars on one plan only.

By the way, try the following. One plan, intergated at 5.7%. lets suppose everyone receives 6.5% + integartion at TWB.

Try calculating the E-Bars with disparity using the allocation method. Everyone should end up with the same E-Bar. Ultimately that is why an integrated plan is considered safe harbor, if you ran the test imputing disparity it passes.

[Blinky the 3-eyed Fish]

Mr. or Ms. Pepsi, aren't you saying your DB plan has a safe harbor formula?

[Guest dietpepsi]

Yes, the DB plan does have a safe harbor intergrated formula.

I have an internal program that automatically imputes disparity on a general test and on average benefits tests (if needed to pass). I am trying trying to determine if there is ever a time I should not be allowing the use of the imputed results. For example, if the plan being tested is already integrated or if the employer has another plan that is intergrated.

The discussion of this topic in a certain resource book is very confusing. It makes it sound like I should not be imputing disparity in the above situations but maybe I am not reading it correctly.

Thanks to everyone. Ms. Dietpepsi.

[AndyH]

You can impute disparity in a general test whenever you wish to, regardless of whether or not the plan is integrated.

The same is true for the average benefits test.

The only thing you need to be VERY careful about is that the money type can be used in the permitted disparity imputation (is that a word?). For example, you cannot impute on employee deferrals, employer matches, SHNECs, etc. That is the main restriction.

Then if you have two plans in a test or tests, as Tom mentioned, you can only impute on one, just as you can only have one integrated (fully).

Hope this clarifies a bit.