Super Integrated Plan for a 501(c)(3) organization?

[Guest]

I have a 501©(3) organization with no HCE's. The organization would like to install a plan weighted in favor of its executive director. Since there are no owners or HCE's, rate grouping won't work. Instead, I'm considering a super integrated formula, which will accomplish their objectives. Can this be done? Is it the best design? With no HCE's, I assume discrimination testing is not done. Any comments? Thanks.

[actuarysmith]

since 401(a)(26) no longer applies to DC plans, and you have No HCE's - why don't you set up a plan that covers only the director? (assuming that is who you are trying to benefit.)

Otherwise, if you are actually trying to benefit others as well, but favor the director, just set up a tiered "profit sharing plan" with the director in Group A (the maximum allocation group.)

Remember, you can always discriminate in favor of one HCE over another, or one NHCE over another NHCE.

[Guest]

Since this is a not-for-profit, even though not a HCE, can the executive director be considered a key employee since he has management responsibility? If so, the top-heavy minimum might be required. Thanks.

[actuarysmith]

In order to be a key employee, the director would have to have an ownership percentage.

Alternatively, if the compensation of the director exceeds 50% of the DB dollar limit (i.e.$65,000 in 2000) and the director is considered an officer, then I suppose that you would have a top-heavy issue.

How about paying the director something below $65,000 and anything above that level in a stand-alone DC plan? (This assumes of course, that the director didn't already meet the Key employee definition in the current year or 4 preceding years - per code section 416(i))