95. Contribution / Allocation formula

Statement of Requirement: Reg. §§ 1.401(a)(4)-2(b)(2) and 1.401(a)(4)- 2(b)(3); Rev. Proc. 2023-37, 2023-51 I.R.B. 1491, sec. 12.02(4)

Document Provision: _____

(Note to reviewer: Nonstandardized plans may automatically, or by an option, satisfy the safe harbor contained in Reg. § 1.401(a)(4)-2(b)(2) (regarding plans with a uniform allocation formula which may or may not impute permitted disparity) and/or Reg. § 1.401(a)(4)-2(b)(3) (regarding plans with a uniform points allocation formula). Compensation for this purpose cannot exceed the limitation under § 401(a)(17) (see LRM #6 for the definition of compensation). As noted, plan provisions may allow for permitted disparity pursuant to Code § 401(l) and the regulations thereunder. See LRM #29 for sample language in this regard.)

(Note to reviewer: No § 401(a)(4) failsafe language is allowed in any Pre-approved Plan document. The plan must pass nondiscrimination testing operationally based on Regs. § 1.401(a)(4)-1 through § 1.401(a)(4)-13.)

End of DC LRMs

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