Permissive Aggregation

[KJohnson]

Two employers in a controlled group each adopt a non-standardized prototype excluding the employees of the other. Two HCE's work for both companies and participate in both plans. Safe harbor 414(s) definition of compensation for allocation of the profit sharing contribution is used which includes comp from all related employers. No allocation conditions for contributions. For the year, one provides a 5% of comp discretionary profit sharing and the other provides a 8% of comp profit sharing for the year. Two questions:

1) If the plans pass 410(b) separately then would each HCE get 13% of total comp in the controlled group and you still would have a 401(a)(4) safe harbor? This doesn't seem right to me but I am not sure where the flaw is.

2) If you need to permissively aggregate the plans to pass coverage, even though each has a 401(a)(4) safe harbor allocation formula, the fact that you are permissively aggregating means you can no longer rely on the safe harbor since you wouldn't have the same percentage of plan year compensation for all participants?

[ak2ary]

1) There is no flaw. If each plan can pass 410(b) on its own (even via the ABT), they are safe harbors for 401(a)(4)

2) If you must aggregate for 410(b), then you do not have a uniform allocation and they are no longer safe harbors.

Sometimes you can do things in two plans that you cant do in one