Section 410(b)Interpretation

[bzorc]

Here is a unique spin on a Section 410(b)cross-testing issue:

Client wishes to benefit his department heads across a controlled-group set of employers. The various department heads will receive a certain percentage of pay, based on their title. None of these department heads, as of now, are considered "highly compensated". The employer DOES NOT wish to benefit any rank-and-file employees; only the department heads.

My question is would this fly under IRC 410(B), under the "no highly compensated employee benefits" scenario? The attorney who is drafting this plan says he does this all the time, and no testing is necessary, as no HCE benefits.

Does this arrangement fly? Any opinions would be appreciated!

Thanks.

[richard]

It's a DC plan. No 401(a)(26). Sounds fine to me.