Guest BarryK Posted March 31, 2004 Posted March 31, 2004 I have a very basic question. Does a defined benefit plan have to be tested under 401(a)(4) nondiscrimination testing if the same benefit formula is used to determine all plan participants' benefits (e.g., 2% of compensation times 10 years of service)?
david rigby Posted March 31, 2004 Posted March 31, 2004 The 401(a)(4) regs include "safe harbor" definitions, the prime purpose of which is to deem the plan as "non-discriminatory" (no testing). IRS regs here: http://ecfr.gpoaccess.gov/cgi/t/text/text-...26/26tab_02.tpl See 1.401(a)(4)-3(b) for safe harbor. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Guest Harry O Posted April 1, 2004 Posted April 1, 2004 Sure. What is your definition of "compensation"? What if it includes annual executive bonuses but excludes overtine, shift differential, etc.? Now it doesn't sound so nondiscriminatory.
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