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Posted

Suppose we have three members of a controlled group cos X,Y and Z. All three have a standardized prototype profit sharing plan; the adoption agreement states that all employers participate in the plan . Each plan has a different allocation formula, one is prorata, the other fixed and the third integrated. Can each employer X,Y and Z allocate a discretionary amount  to just its employees based on its plan's allocation formula and then general test all the employees together for coverage and nondiscrimination?

Posted

I think your testing is sound but they are not following the terms of the plan docs.  Amend them to Non-Std or VS docs and properly exclude each entity the other plans. 

 

Posted

Exactly, you have three plans with all employees in all three plans. Whether X, Y or Z can declare and allocate a PS contribution to their intended plan only depends on the terms of the respective plans.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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