Communication to employees

[Guest art]

How are people generally addressing the human relations side of cross testing? How do you tell one employee he/she is getting 3% of pay, and another getting 4% of pay when the employees perceive themselves to be in the same job. This is particularly sensitive when you are dealing with giving only NHCE's contributions (ie. the plan is not really cross tested as no HCE is receiving a contribution). We are using a tiered allocation in a profit sharing plan to control the accruals in a floor offset defined benefit plan. The offset arrangement passes muster.

[MoJo]

Tricky situation! What I've seen done in the past is that the formula is described as "taking into account certain factors, including compensation, tenure, age, position, etc...). Don't get into specifics about who gets what. If someone wants to see the plan, then they are entitled to it. Reinforce that plan contributions are part of compensation, and the company has a policy (if its true) against disclosing compensation to other employees (for obvious reasons). Good luck.

[Guest JF]

There are CT-PS plan documents now that have worded the cross testing without actually having numbes of percents in the document. It will define the groups in the document, but basically say that instructions will be given to the trustee each year as to how to allocate. The SPD will reflect this also. As another option if you are showing numbers in your document, is that you can produce separate SPD's for each group within your plan so that each group only sees the benefit being given to their group, not the others. Of course, when the contribution is actually made, people will talk regardless of the written disclosure. This can be tough in cases where the groups are not receiving benefits based on anything other than what works for the owners.