New Comp doesn't work in 3rd year

[Jim Chad]

Does anyone see a problem with this idea?

If Nov. 2008 an older employee is hired, he will come into the plan on 1-1-10. Now new comp plan doesn't work so well and we cannot amend for 2010 to add permitted disparity. If every one is in their "own group", can I give an allocation approximating permitted disparity. Then do my testing on an allocation basis and imputing permitted disparity?

[Tom Poje]

if everyone is in their own group, then yes, you can provide whatever contribution to each prson as you want so approximating permitted disparit per person is ok.

ah, the joys of having an elderly NHCE show up.

of course, you could also give, for example 10% to one NHCE, 5% to another, 8% to another, etc since each is in their own group, but explaining that is fun, especially if the people start comparing notes!

[Bird]

I agree, as long as the plan allows you to contribute whatever you want you can test however you want.

[12AX7]

So, if Cross-testing does not work for a particular year, then allocate perhaps using permitted disparity and the plan passes without further testing?

[Tom Poje]

I'd put a clarifier on that and say that would probably only be true if

each person was in the their own rate group

[Bird]

So, if Cross-testing does not work for a particular year, then allocate perhaps using permitted disparity and the plan passes without further testing?

To be precise, you want to create an allocation, using the document's allocation formula, that looks just like a permitted disparity allocation would (using 5.7% and the TWB). But then you still have to test! An integrated allocation will typically pass the general test...but not necessarily. If you have an HCE under the TWB and an NHCE over, the HCE will wind up with a higher adjusted allocation rate.