Combined Plans - Cross Testing, Permitted Disparity

[Gary]

I have a combined DB/DC plan.

I am in the process of researching these items, but wanted to get the ball rolling on my questions anyway.

1. My understanding is that only one of the two plans can apply permitted disparity in the non discrimination testing?

2. Let's say we apply permitted disparity to the DC plan and that we are testing the combined plans on the accrual method, i.e. cross testing the DC allocation. Is permitted disparity first computed and then followed by conversion to accrual rates OR is conversion to accrual rate done and then permitted disparity applied? I perceive that it is the former.

Thank you.

[Mike Preston]

Practically speaking, yes, but technically speaking one may not impute more than 100% between the two plans. I've only ever had the need to split the disparity once in over 15 years of doing this stuff.

The latter.

[Guest amadeus]

Mike,

What were the circumstances that necessitated the split?

[Mike Preston]

Takeover where somebody had done it that way in determining the contribution for the year in question. It was easier to just do it that same way than it was to re-do it, as they had actually already done an -11g amendment to make the whole thing work. Changed it for the next year.

[Gary]

Mike,

You say "the latter".

Meaning that I first cross test the allocation into an accrual rate and then apply permitted disparity on the accrual rate.

Do you have a specific cite in the regulations supporting that?

Thanks.

[Mike Preston]

Nope, just the regs themselves, as a whole. I'm sure you can find one if you look at all of the examples.