What about aggregating plans as a way to circumvent IRS' proposed Regs

[AndyT]

Have the employer adopt 2 profit sharing plans:

Plan 1 covers the "targeted group" and excludes everyone else.

Plan 2 covers everyone else and excludes the targeted group.

Aggregate the plans for 410(B) and 401(a)(4) (most likely utilizing cross-testing).

Would the IRS debunk this based on their proposed Regs?

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Andy Treece

[Guest]

in some ways, I thought that was the reason the IRS gave its 'nod of approval' to 'class' plans. otherwise employers would simply put in more than one plan as you suggest. becase of 401(a)(26) this would not have been possible in the past, but that no longer applies.

[Alonzo]

I don't see this working. When you aggregate for 410, you have to aggregate for BRF testing. If I understand the IRS notice correctly, the intent here is to extend BRF principles to the availability employer contribution allocation rates.

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