IMPUTED DISPARITY IN CROSS TESTED 401(k) PS

[pmacduff]

Tom P. or anyone using Relius...when imputing disparity for non-discrimination testing in a Safe Harbor 401(k) Profit Sharing Plan which utilizes the 3% SHNEC, does the Relius software "know" to only impute on the PS when I check that box or should I be testing "by hand"?

[Tom Poje]

It is my understanding that it works, quite possibly it is only on the most recent update. I get everything jumbled up in my head.

if the plan has provided the gateway minimum (e.g. an additional 2% nonelective) than all NHCE with SSRA = 67 will have an E-BAR > .65 on the 2% piece anyway, so they wont matter- at least not until 2007, if I did my 'ciphering' correctly.

That leaves you with ees who are age 50 or older that might not get the full disparity. hopefully you aren't relying on them to pass rate group testing since their EBARs will be very small. they might effect the avg ben % test, but again not much. Still, of course you should always be concerned, especially if you have provide a smaller additional nonelective contribution.

[pmacduff]

Thanks Tom - Most of my xtested plans are small companies with older owners that we maximize with no NHCEs over age 50 so I don't even have to impute disparity. But on this new plan looks as though imputing will help them pass testing. I can certainly check it by hand, I just wondered if Relius was "reliable" in its computations!! Thanks again.

[Guest John Taylor]

Pmacduff,

Clicking the 'ADP Safe Harbor' box in plan specs/acct definition/sources does tell the non discrim program not to impute permitted disparity on this source of money. This functionality was added at version 7.3.

[pmacduff]

Thanks to you too John...most helpful!