ADP wage for plan excluding comp in excesss of $50,000

[R. Butler]

Have a takeover plan. For some reason the plan excludes compensation in excess of $50,000. (Haven't figured out why yet.) The prior tpa used that definition when running the ADP test. I don't see that excluding wages in excess of $50,000 ever satisfies 414(s) & therefore the limitation couldn't be used in the ADP test. Am I missing something?

Thanks in advance for any guidance.

[R. Butler]

Never mind on this. Turns out it could possibly satisfy 414(s). I was thinking that such a definition would not be reasonable, but upon further research I have discovered that excluding comp. over a specified dollar amount is considered reasonable.

Thanks anyway.

[J Simmons]

I was thinking that such a definition would not be reasonable, but upon further research I have discovered that excluding comp. over a specified dollar amount is considered reasonable.

I like your initial thinking better than the thinking of Congress and the IRS: to me it seems unreasonable a definition to exclude compensation over a specified dollar amount, including the 401a17 dollar amount.