Flat $100 non-elective contribution per participant on standardized pr

[Spencer]

Thanks, Dawn. You were right ... compensation is limited to $2,000 for purposes of non-elective contribution.

[Spencer]

I have takeover case on a PPD standardized prototype with a discretionary non-elective contribution with a non-integrated allocation formula. The plan was amended to allocate a flat $100 contribution to each participant.

Doesn't this contradict the allocation method in the adoption agreement (which is pro-rate on compensation)? Would this be an operational defect?

[Dawn Hafner]

Usually when I have seen plans that want to allocate a flat dollar amount to each eligible participant they do it through the definition of compensation for that allocation. For example, eligible compensation will exclude all compensation in excess of $50.00. Then when the allocation is completed everyone gets the same dollar amount. This non safeharbor defintion of comp is not discriminatory as the HCEs will have a much greater reduction in comp than the NHCEs. What does the compensation section say?

[This message has been edited by Dawn Hafner (edited 12-14-1999).]