Davis Bacon - disproportionate contributions

[AKconsult]

I have been looking at the final regs regarding the fact that QNECs used in the ADP test have to be limited to the greater of 5% of pay or 2 times the representative rate. (Reg 1.401(k)-2(a)(6)(iv))

The regulations read that “notwithstanding” the paragraph that provides for the 5%/2X representative rate limit, contributions made for Davis Bacon can be taken into account if they don’t exceed 10% of pay. I can’t tell if the 10% is meant to replace the 5% in the 5%/2X rule OR if the 10% is the absolute maximum and the 2X rule does not apply.

Has anyone done any research on this?

I did see an article from Sungard where they indicate that the 10% just replaces the 5%, so effectively the overall limit for DB is higher. I think this is probably the intent of the Regs but I just can't come to that conclusion when I look closely at them. Maybe it is just a matter of semantics...