4 Step Permitted Disparity - Maxing Out Two Owners

[Kattdogg12]

We are running a projection for a plan with permitted disparity and trying to max out the owners.  Is it possible to max out two owners if one maxes out before the other? One's deferrals are less than the other, so they can receive a larger profit sharing. 

HCE #1 $350,000 comp $23,500 Roth $21,000 6% SH Match - if we give $25,500 PS - this is 7.29%

HCE #2 $350,000 comp $18,500 Roth $18,500 6% SH Match - if we give $33,000 PS - this is 9.43%

I ran this through chat(k) and the response was below: 

By sizing profit-sharing so that HCE #1 reaches $70,000, you establish a uniform 7.2857% profit-sharing rate. Participant #2 therefore also receives $25,500 of profit-sharing, bringing his total contributions to $62,500. He cannot reach the $70,000 cap under the same allocation formula. Under a four-step permitted-disparity profit-sharing formula, both owners’ allocations derive from one uniform banded schedule. 

 

Once we max out #1 at 7.29%, is that what HCE #2 must receive?  There are also two NHCEs - so this also affects what they get - if we can give #2 up to $70,000, then I assume their % is based off the higher number.  

[Lou S.]

What does your document say? I believe you can do a refund of 415 excess from the deferral for HCE# so they receive the full employer contribution or allocate the excess to all other participants in the plan who have not reached the 415 limit but it could depend on what the document says what options you have.