Reduced elective deferral limit for a subset of HCEs

[buckaroo]

I have a plan sponsor that wants to amend their plan document (2015) to provide a reduced elective deferral maximum for certain HCEs. For example, the plan covers employees in Division A and Division B. The plan sponsor wants to limit the maximum elective deferral percentage to 5% for HCEs in Division, while leaving a 25% limit for HCEs in Division A. (All NHCEs are limited to 50%.) Does anyone see any issue with this? I see none at this time since it is limiting HCEs and not affecting NHCEs.

Thoughts?

[david rigby]

Somewhat oversimplified: Non-discrimination regs permit discrimination against, or among, HCEs.

But check the plan document to verify that it does not have any conflicting provisions.

[MWeddell]

... But check the plan document to verify that it does not have any conflicting provisions.

It's unlikely that the plan document allows the plan administrator to place different contribution limits on Division A HCEs versus Division B HCEs. To operate the plan in accordance with the plan document, you most likely need to amend the plan document.