LarryDavid Posted May 21, 2013 Posted May 21, 2013 I have a plan that would be safe harbor if not for a different definition of compensation for sales people (their pay is capped at $100K). Can I test as two component plans as follows: 1) Component Plan A is all non-sales people; this plan is safe-harbor and therefore satisfies 401(a)(4) and 410(b). (Can a component plan be considered safe harbor when the main plan is not? I know there are rules against using service as the component since employees could grow into the next service bucket, but for this purpose I'm wondering if it's okay). 2) Component Plan B would have to satisfy 410(b) and 401(a)(4) on its own, which presumably would be no problem since NHCE's will generally receive a benefit on their full pay while the HCEs will not (since their benefit is limited to pensionable pay of $100K). Note that the main plan passes 410(b) and 401(a)(26) on its own. As a side question, if instead of restructuring the plans I instead went the route of proving the main plan's defintion of pay was nondiscriminatory by running the compensation test under 414(s), would I still have to run the general test to satisfy 401(a)(4)? I.e., if the only thing keeping the plan from being safe harbor is the definition of pay, and I prove that pay is nondiscriminatory under 414(s), do I in essence treat the plan as safe harbor for 401(a)(4) purposes?
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now