EAch person in won group Is permitted disparity possible?

[Jim Chad]

I have a plan where Discretionary non-elective contributions were never expected. The document has everyone in their own group. The owner is very young so cross testing will not work.

Can I use the same permitted disparity that would be allowed if the document said integrate at $50,000?

[WDIK]

http://benefitslink.com/boards/index.php?showtopic=38349

[Jim Chad]

Perfect! Thanks, WDIK.

By the way.....your using WDIK for a name always makes me smile.

[John Feldt ERPA CPC QPA]

If the allocation is 'each in their own class' then can the plan actually integrate at a $50,000 level though? The plan can impute disparity, but I thought that required the use of the full taxable wage base.

If the plan document does not spell out a taxable wage base of $50,000, then I don't know how that integration level can apply. But if it could, without having it written into the plan, then I would like to know how that is done.

[Jim Chad]

Good Point! I had forgotten that.

Thanks, John.

[austin3515]

I suppose as long as you could pass rate group testing and, if necessary, average benefits you could integrate at $50,000.

[Kevin C]

What does the plan document say about how the contribution amount is determined for each allocation group? I would expect it to be a discretionary amount for each allocation group.

You wouldn't be imposing an integrated formula on the plan. All you are doing is using an integrated allocation calculation to help determine the amount of contribution for each allocation group. Will it work if you integrate in the calculation at $50,000? Try it and see. If an HCE gets a larger allocation integrating at $50,000 than integrating at the TWB, I doubt it will work. The 401(a)(4) general test will tell you if it works.

[Bird]

If an HCE gets a larger allocation integrating at $50,000 than integrating at the TWB, I doubt it will work. The 401(a)(4) general test will tell you if it works.

I agree (I don't think it will work).

[austin3515]

Let's say, for argument's sake, that the owner is 65 and the employees are all younger than 25. Let's also say that the employees are getting at least 1/3 of what the HCE is getting (in fact bet their getting more than half what the owner is getting).

I think it would pass, personally... (using xtesting)

[WDIK]

The owner is very young so cross testing will not work.

[austin3515]

Right...