Definition of Compensation in 401(a)(4) Testing (BRF)

[Guest amg49]

Currently testing whether the benefits, rights, and features of several plans are discriminatory. The compensation definitions all pass 414(s) but are slightly different. Does anyone know if the definitions need to be uniform or if we can just test the definition itself for discrimination issues (410(b) tests).

Thanks for any input!

[Tom Poje]

I'd have to believe the definitions would have to be the same.

for example, I could exclude deferrals.

so plan A provides profit sharing based on total comp

Plan B provides profit sharing based on comp less deferrals.

I would think on a combined basis this would fail the requirement that "deferrals be treated on a consistent basis"

or at least that is how i would see things. this would prevent plan A for being for HCEs and Plan B for NHCEs and making an end around the nondiscrim test if each plan provided 5% of plan comp.

as an aside, we know that you can have a 3% safe harbor, and a basic match match, but combined those plans would'nt pass even though each by itself would.

but then, these are comments from a pilgrim, so consider the source.