Method of computing and allocating nonelective contributions under an employer sponsored plan, where the allocation method results in participants with compensation above the integration level receiving a higher percentage of contribution .
When computing social security integration, the taxable wage base is used to determine the allocation of contributions.
- IRC § 401(l)
- Treas Reg § 1.401(l)-1 Permitted disparity in employer-provided contributions or benefits.
- Treas Reg § 1.401(l)-2 Permitted disparity for defined contribution plans.
- Treas Reg § 1.401(l)-3 Permitted disparity for defined benefit plans.
- Treas Reg § 1.401(l)-5 Overall permitted disparity limits
- Notice 89-70
Additional Helpful Information
- Permitted disparity cannot be used for SIMPLE IRAs