Cash Balance Offset arrangments

[Guest RMcCord]

I am working on a Cash Balance Plan with an offset Profit Sharing Plan. I understand the Profit Sharing allocation must be allocated on a uniform bases in order to satisfy the requirements, but does the "uniform" apply to both the HCE's as well as the NHCE's?

The Employer has two Owners who wish to participate in the Cash Balance Plan and are willing to contribute the Safe Harbor 7.5% Profit Sharing allocation to the NHCE's in the Profit Sharing Plan. They would like, however, not to contribute the 7.5% for the other two HCE's in the Plan. Is this possible or does this violate the "uniform" clause?

[SoCalActuary]

For the sake of managing the combined 6% deduction issues, you may need to specify your PS plan in two parts:

Part 1 - the portion subject to offset is a uniform rate (say 5% of pay.)

Part 2 - the discretionary individual part (up to the gateway requirement) applied only to those who have to receive it.

This allows you to keep the total deduction at 6%, assuming your owners are a significant part of the total payroll.

It also allows you to have a uniform plan for the offset portion.

However, it does require you to separately account for the portion of the PS balance in each part.