Non-Profits and New Comparability - Free Choice?

[ldr]

Hi to All,

We have a 401(k) plan for a non-profit entity with a new comparability formula for the profit sharing.  The intention in the design was to have each participant in his own group and to vary the contribution level at will.  There are no HCEs and of course no "owners".  

Can the employer give 10% of pay to the 3 oldest employees and nothing to the 3 youngest employees?  Can the contribution be literally whatever they feel like giving to each person?

We are so accustomed to the world of small closely held companies that it's hard to think outside the parameters of normal non-discrimination testing. Our first instincts are to say "Oh no, you can't do that!" but perhaps you can!  Any thoughts?

Thank you as always.

[Mike Preston]

Just one: you can do it. 

[Tom Poje]

just to make sure : you indicated "the INTENTION in the design WAS to have each participant in his own group."

hopefully the document is written with each person in their own group. there is a difference between 'intention', 'was' and actual fact.

[ldr]

Thank you both very much!  Tom, I see the distinction and the document is fine.  The way I phrased it in my question left some doubt.  Yes, each person is indeed in his or her own group.

Have a wonderful day, both of you!

 

[Mike Preston]

1 hour ago, ldr said:

The way I phrased it in my question left some doubt. 

 

Nah. 

[jpod]

I am sure you know that any decisions about how much to allocate to who must be guided by Title VII and comparable state laws' nondiscrimination requirements, but I thought I would mention it.