Representative Matching Rate

[austin3515]

The EOB has a section in here that says the following paragraph means something surprising:

© Definition of matching rate. For purposes of this paragraph (a)(5)(ii), the matching rate for an employee generally is the matching contributions made for such employee divided by the employee's elective deferrals for the year. If the matching rate is not the same for all levels of elective deferrals for an employee, the employee's matching rate is determined assuming that an employee's elective deferrals are equal to 6 percent of compensation.

The EOB is saying this means that if a plan disregards 401k over __% of pay for purposes of calculating the match, that the employee would be receviing a different rate of match for different levels of deferrals (one match rate for contributions below ___% of pay and then a 0% match for contributions above ___% of pay).

The implication from the above is that you would basically always be assuming that an employee contributed 6% of pay (i.e., because most plans will disregard at least some 401(k).

That outcome seems to be a little too ridiculous to be applied in practice. Anyone agree?