414(s) Test

How is that a failure under 414s?

Agree with Bill. The test under 414(s) is not how close the two percentages are, but rather whether the HCE percentage of total compensation exceeds by more than a de minimis amount the non-HCE percentage. In other words, you only have a 414(s) failure if the HCE percentage is too far above the non-HCE percentage. The other direction doesn't matter. 

1.414(s)-1(d)(3): Nondiscrimination requirement—(i) In general. An alternative definition of compensation under this paragraph (d) is nondiscriminatory under section 414(s) for a determination period if the average percentage of total compensation included under the alternative definition of compensation for an employer's highly compensated employees, as a group for the determination period does not exceed by more than a de minimis amount the average percentage of total compensation included under the alternative definition for the employer's nonhighly compensated employees as a group.

And just to add to the above, although the IRS has never issued any formal guidance on an acceptable "de minimis" percentage, a widely accepted (or at least utilized) percentage is 3%.