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March 6, 2009

Social security integration (Permitted disparity)

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Definition

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.

Referring Cite

  • 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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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