Integration level

[K2retire]

We're preparing a VCP filing for a client who has been calculating their Integrated profit sharing contribution wrong for a number of years. In trying to figure out how far back the error goes I'm seeing a document dated 1995 that shows the fixed contribution rate as 8.5% of compensation up to 80% of the taxable wage base plus 13.9% of compensation over 80% of the taxable wage base.

During my years in the industry the rule has always been that you had to use MORE THAN 80% of the taxable wage base to be allowed to use an additional 5.4%. Would using EXACTLY 80% with an additional 5.4% have been permitted in 1995? When did that change?

[Lou S.]

The documents I've seen 5.4% are written something like 80% of the TWB + $1 or 80.01% of TWB.

As far back as I can recall exactly 80% limits you to 4.3% disparity, even back in 1995.

[ETA Consulting LLC]

"More than 20% but up to 80%" would allow a maximum disparity of 4.3%. I think that is what you are saying. The document should've been drafted to say 80% plus $1 as the integration level to ensure it was 'more than' in order to get to the 5.4%.

So, I'm with you and Lou S. on this one.

Good Luck!

[K2retire]

Thanks!