ASC - meaningful benefits

We use ASC for our DC/CB testing (including 401a26). We have some plans where in the CB plan, the "staff" get  the minimum amount possible. Just enough to satisfy the meaningful benefit (401a26 test).  There has been some discussion within our actuaries that the meaningful benefit in ASC (typically calculated at .5%) isn't really enough. Granted the .5% meaningful benefit isn't set in stone law and instead people point to the infamous Schultz memo. I am curious if others use ASC's calculation of the meaningful benefit or are uncomfortable with the value being presented out of ASC? Hope that makes sense.

Out of curiosity (not using ASC myself), you are not talking about a straight .5% of salary but rather a pay credit that is actuarially converted to an equivalence of .5%, correct?

Meaningful benefit is facts and circumstances but apparently most actuaries and other providers (because of stubborn IRS agents?) are applying the 0.5% accrual rate as gospel. It would be nice to have formal guidance of some sort but all we have is that Schultz memo to argue for or against. If a 21-year-old gets 1.5% of pay credit and 4% interest and that creates an accrual rate of 0.5% or more, is that meaningful to that employee? (Show me any 21-year-old who think any retirement contribution for them is meaningful!) But a $10,000 credit for a somewhat older doctor making over maximum pay comes in under 0.5% accrual - not meaningful? Short his/her next account statement by $10,000 and you'll see how meaningful that is! Facts and circumstances are so subjective, having that 0.5% threshold (agree with it or not) provides some B&W to an otherwise gray area.

We find the ASC calculations match our spreadsheets (when both are properly coded), so have confidence there.

FYI, you don't need to provide the 0.5%+ accrual rate for everyone, only enough to satisfy your 40% or 50 threshold for 401(a)(26). 

Isn't there a spot in the ASC software to program the "meaningfulness" at whatever level you want, with it defaulting as 0.5%

In my opinion, the Paul Shultz memo (from June 2002)  "set the standard"  [at 0.5%] for testing whether a benefit is considered meaningful by IRS.    Is anyone aware of IRS challenging a   0.5%+ benefit accrual as  NOT meaningful?

....   Jeff

Paul Shultz memo:   https://www.irs.gov/pub/irs-tege/memo_060602.pdf

Rereading the Paul Schultz memo recently I am wondering whether shareholder employees, which could include family members on the payroll, really need to get a .5% accrual. The force of the letter seemed to be that nonshareholders were being discriminated against absent a meaningful accrual.  Could we not have children who are shareholders receive less than .5% accruals, assert that they are benefiting for 401(a)(26) and still satisfy the spirit of the Schultz memo? The Schultz letter is focusing on accrual rates for nonshareholders employees that are less than .5%. It seems to says nothing to the effect that shareholder accruals less than .5% are not meaningful. Any thoughts on this?

Regulation by a memo that has no force of law.  A perfect example of how the entire regulatory structure (401a, 403b, etc) is BROKEN and should be replaced from the ground up (ie, it could be substantially simpler).