Cash Balance Testing

[retbenser]

I have a doctor and his wife, both 45 years old.

2 employees ages 30 and 53.

The doctor's pay credit is 50% of comp.

The spouse is not getting pay credit.

The 2 employee are getting 2% pay credit.

The plan clearly fails the 401(a)(4) test. Correct?

And also fail the ABP test as well. Right?

There is no way this plan design passes the nondiscrimination testing. Right?

Thanks for all responses.

[Effen]

I would agree that on the surface it doesn't look promising.

Do they possibly have a profit sharing plan as well?

[retbenser]

I would agree that on the surface it doesn't look promising.

Do they possibly have a profit sharing plan as well?

No -- just a CBP. Thanks.

[Effen]

Why don't you just ask the actuary for a copy of the non-discrimination test?

[AndyH]

To make the testing work, you give the young employee a profit sharing allocation in a profit sharing/401(k) plan. It ain't gonna work the way it's structured.

[Tom Poje]

I'd suspect that such a plan is top heavy, and the 2% paycredit would be insufficient to satisfy 2% accrual requirement as well.

[AndyH]

Good point.