Department of the Treasury Instructions for Internal Revenue Service

Schedule Q (Form 5300)

(Rev. August 2004)

Elective Determination Requests

Section references are to the Internal Revenue Code unless otherwise noted.

3. The employer applies section General Instructions Specific Instructions 410(b) separately to the portion of the

plan that benefits only employees who

satisfy age and service conditions under Participation, Coverage, Purpose of Schedule the plan that are lower than the greatest

and Nondiscrimination minimum age and service conditions The information requested on Schedule Q permissible under section 410(a), (Form 5300) relates to the manner in Requirements 4. The plan benefits employees of which your plan satisfies certain Line 1. more than one qualified separate line of qualification requirements relating to If ‘‘Yes’’ is checked, attach a business (unless the plan is tested under minimum participation, coverage, and schedule labeled Demo 1.

the special rule for employer-wide plans nondiscrimination. This schedule allows Demo 1 is prepared to show how a in Regulations section 1.414(r)-1(c)(2)(ii)), you to indicate whether you wish certain plan that is using the qualified separate 5. The plan benefits the of these requirements to be considered line of business (QSLOB) rules of section noncollectively bargained employees of by the IRS in its review of your plan. 414(r) satisfies the gateway test of more than one employer. section 410(b)(5)(B) or satisfies the 6. The plan benefits both collectively Who May File special rules for employer-wide plans. bargained and noncollectively bargained

The use of this schedule is optional. Filers See Guidelines for Certain employees.

of Form 5300, Application for Demonstrations on page 2. • The plan is permissively aggregated

Determination for Employee Benefit Plan, If a request for an administrative with another plan under Regulations

Form 5307, Application for Determination scrutiny determination on any separate section 1.410(b)-7(d).

for Adopters of Master or Prototype or line of business of the employer is • The plan is restructured into

Volume Submitter Plans, and Form 5310, pending with IRS, submit a copy of the component plans under Regulations

confirmation receipt issued by IRS with section 1.401(a)(4)-9. Application for Determination for

Terminating Plan, may elect to complete the application. See instructions for Demo 4 under

and file Schedule Q (Form 5300) with Line 2. A determination letter issued for a Guidelines for Certain Demonstrations on

their application to broaden the scope of a page 3. Also, see the instructions for line defined benefit plan that requests a

determination letter, by requesting 9 for additional information that may be determination regarding section 410(b)

will also be a determination regarding required in Demo 4. determinations for certain coverage and

nondiscrimination requirements that are section 401(a)(26). Line 5. This line is a request for a

not routinely addressed in a determination determination that the plan satisfies the Line 3. Determination letters generally do minimum coverage requirements of letter in conjunction with an application for not provide reliance that benefits, rights, determination letter. section 410(b) due to satisfying the and features under a plan satisfy the average benefit test of 1.410(b)-2(b)(3). nondiscriminatory current availability

requirement of Regulations section If a determination regarding the If Schedule Q is not filed, the 1.401(a)(4)-4(b). average benefit test is being requested, determination letter issued for this check ‘‘Yes’’ and see the instructions for CAUTION plan will not consider and may not Answer ‘‘Yes’’ only if requesting a

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Demo 5 under Guidelines for Certain be relied upon with regard to the general determination that any specified benefit, Demonstrations on page 3. test and certain other provisions under right, or feature meets the

section 401(a)(4), the average benefit test nondiscriminatory current availability This determination relates only to the

requirement of Regulations section satisfaction of the requirements of section under section 410(b), and the definition of

1.401(a)(4)-4(b). 410(b). This determination is mutually compensation provisions of section exclusive of any determination that the 414(s). If ‘‘Yes’’ is checked you must provide a plan may satisfy section 401(a)(4). If the demonstration for each benefit, right, and plan must satisfy a general test in order to feature you wish considered. Label this What to Complete satisfy section 401(a)(4), a determination attachment Demo 3. Also see Guidelines that the plan satisfies the average benefit If you elect to use this schedule, complete for Certain Demonstrations on page 2. test is not a determination that the plan’s all lines unless otherwise directed. Line 4. Check ‘‘Yes’’ and attach Demo 4 rate groups satisfy the modified average Applicants requesting specific if you are requesting a determination that benefit test that is included in the general determinations are required to submit the plan satisfies the average benefit test test.

demonstrations showing how their plans of section 410(b) or the nondiscrimination Line 6. This is exclusively a request for a satisfy the minimum participation, requirements of section 401(a)(4) and for determination that the plan satisfies the coverage, and nondiscrimination purposes of satisfying these nondiscrimination in amount or benefits

requirements, as applicable. The requirements, any of the following apply: requirements under section 401(a)(4) of demonstrations are explained in these • The plan is disaggregated because: the Code using a non-design based safe instructions. Information or computations 1. The plan includes a section 401(k) harbor or a general test. This that are used for more than one purpose or 401(m) plan and a portion that is not a determination is mutually exclusive of any may not be cross-referenced but must be section 401(k) or 401(m) plan, determination that the plan may satisfy

repeated for each applicable 2. The plan includes an ESOP and a section 410(b). A determination that the

demonstration. portion that is not an ESOP, plan satisfies the average benefit test is

Cat. No. 22189C
not a determination that the plan’s rate If ‘‘Yes’’ is checked, attach a schedule nondiscriminatory in amount. See

groups satisfy the modified average label Demo 7. See the instructions for Regulations section 1.401(a)(4)-6(c).

benefit test that is included in the general Demo 7 under Guidelines for Certain If you enter the letter “C,” attach a test. Demonstrations on page 5. Demo 11, if applicable. See the

If this is a request for a determination Line 8. Check ‘‘Yes’’ if a determination is instructions for Demo 11 under

regarding a non-design based safe harbor being requested for a plan that is part of a Guidelines for Certain Demonstrations on

or a general test see the instructions for floor arrangement. If “Yes” is checked, page 5.

Demo 6 under Guidelines for Certain attach a schedule labeled Demo 8. See

Demonstrations on pages 4 and 5. The the instructions for Demo 8 under Guidelines For Certain

Demo 6 must show that the plan satisfies Guidelines for Certain Demonstrations on

either: page 5. Demonstrations

1. The contributions or benefits The following instructions describe

general test in Regulations sections: Nondiscriminatory additional information that must be

• 1.401(a)(4)-2(c), included in the demonstrations. Compensation and • 1.401(a)(4)-3(c), Applicants must follow the • 1.401(a)(4)-8(b)(2), Employee Contributions guidelines in these instructions • 1.401(a)(4)-8(c)(2), Line 9. Check “Yes” if a determination is CAUTION and indicate in their

! • 1.401(a)(4)-8(c)(3)(iii)(C), or being requested where: demonstrations where the elements in the • 1.401(a)(4)-9(b). guidelines are addressed. Applicants 2. The nondesign-based safe harbors 1. The plan bases contributions or must explain why any elements have not described in Regulations section benefits on a definition of compensation been addressed. 1.401(a)(4)-2(b)(3) (safe harbor for that does not satisfy the requirements of

uniform point plans) or Regulations Regulations section 1.414(s)-1(c)(2) or Information or computations that are

section 1.401(a)(4)-3(b)(4)(i)(C)(3) (3); or used for more than one purpose or

(alternative safe harbor for flat benefit 2. The plan includes a section 401(k) provided elsewhere in the application may

plans). and/or section 401(m) plan that not be cross-referenced.

incorporates an actual deferral

Also enter one of the following letters percentage or actual contribution Demo 1 – Qualified Separate

in the space provided in line 6 that percentage test using a definition of Lines of Business

indicates if the determination requested compensation that does not satisfy the Provide a schedule with the following

relates to: requirements of Regulations sections information, as applicable:

1. A Defined Benefit Plan (DBP) 1.414(s)-1(c)(2) or (3). 1. The Code section(s) for which the

being tested under the general test in employer is testing on a separate line of If this plan has been disaggregated Regulations section 1.401(a)(4)-3(c) that business basis (for example, section into separate plans or restructured into involves a facts and circumstances 410(b) or section 401(a)(26)), component plans, this line may be determination under the ‘‘safety valve’’ 2. The separate lines of business that checked “Yes” to request a determination rule in Regulations section have employees benefiting under the if any of the separate disaggregated plans 1.401(a)(4)-3(c)(3); plan, or restructured component plans are 2. A plan being tested under a 3. A demonstration of how the plan described in 1 or 2 above. Also complete general test that does not involve a meets the nondiscriminatory classification a Demo 4 and indicate on the Demo 4 determination under the safety valve rule; requirement of section 410(b)(5)(B) and each disaggregated plan or component or Regulations section 1.414(r)-8(b)(2) on an plan to which 1 or 2 applies. 3. A plan intended to satisfy a employer-wide basis, and

nondesign-based safe harbor. Section 401(k) and 401(m) plans 4. If the requirements of section

may not be restructured. 410(b) or section 401(a)(26) are to be Line 7. Check line 7(i) ‘‘Yes’’ if a CAUTION applied to this plan on an employer-wide !

determination is being requested basis under the special rules for regarding any plan provision which Attach Demo 9 if you checked “Yes” employer-wide plans, a demonstration of provides for pre-participation or imputed and see the instructions for Demo 9 under how the plan meets the requirements of service as defined in Regulations section Guidelines for Certain Demonstrations on the applicable special rule in Regulations 1.401(a)(4)-11(d)(3)(ii). Check line 7(ii) page 5. sections 1.414(r)-1(c)(2)(ii) or ‘‘Yes’’ if a determination is being Line 10. Check “Yes” if this is a defined 1.414(r)-1(c)(3)(ii). requested for a plan amendment or, in the benefit plan and a determination is being case of an initial determination, a plan requested regarding employee Demo 2 provision which provides for a period of

past service that exceeds the period set contributions not allocated to separate A Demonstration is not required. See

forth in the safe harbor in Regulations accounts. explanation for line 2 on the Schedule Q

Line 11. Enter the letter shown on the (Form 5300). section 1.401(a)(4)-5(a)(3). form that corresponds to the method that Do not check ‘‘Yes’’ if past service, Demo 3 – Nondiscriminatory is being used to determine the pre-participation service, or imputed employer-provided benefit for purposes of Current Availability of Benefits, service is credited under the plan solely to Regulations section 1.401(a)(4)-6(b). The Rights, and Features the extent required by one or more of the

following: composition-of-workforce and minimum 1. An applicant requesting a benefit methods may only be used with determination that a plan satisfies the 1. The service crediting rules under plans that satisfy the unit credit safe nondiscriminatory current availability section 410(a) (eligibility), section 411(a) harbor in Regulations section requirement of Regulations section (vesting), section 413 (collectively 1.401(a)(4)-3(b)(3). 1.401(a)(4)-4(b) for any benefit, right, or bargained plans), or section 414(a) If you enter the letter “A,” attach a feature (‘‘BRF’’) specified by the applicant (service for predecessor employer), Demo 10. See the instructions for Demo should ordinarily demonstrate the 2. The hour of service method under 10 under Guidelines for Certain following for each BRF that the applicant 29 CFR 2530.200b-2 and the elapsed Demonstrations on page 5. If applicable, wants considered: time service-crediting methods under

Regulations section 1.410(a)-7, and a. Identify the specific BRF, including also indicate the plan factor.

3. The prohibition on double proration Line 12. Enter the letter that corresponds terms pertaining to the BRF, such as

of service and compensation in 29 CFR to the method used to show that the eligibility conditions, timing, election

section 2530.204-2(d). employee-provided benefit is rights, etc.

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b. Cite the plan provisions that Demo 4 – Test for All Plans

describe the BRF and all terms relating to Restructuring, Mandatory All plans using the average benefit test the BRF. Disaggregation, or Permissive must also include the following

c. Describe any conditions on the Aggregation information on Demo 5:

availability of the BRF that were 1. The testing period (see Regulations Explain the basis of the disaggregation, disregarded in determining current section 1.410(b)-5(e)(5) for an optional permissive aggregation, or restructuring; availability. averaging rule). identifying the aggregated or separate d. If the BRF is contingent on an disaggregated plans or component plans, 2. The definition of testing service unpredictable event, describe the and demonstrate how any restructured (including imputed and pre-participation contingency and determine current component plans satisfy section 410(b) service). availability as if the event had occurred. as if they were separate plans. 3. A description of the testing group (see e. If applicable, describe how the Regulations section 1.410(b)-7(e)). Any other plan that has been special rule in Regulations section permissively aggregated with this plan 4. Whether the employee benefit 1.401(a)(4)-4(d)(3), relating to early should be identified by: percentages are determined on a retirement window benefits, has been • Name, contributions or benefits basis. applied. • Plan number, and 5. Whether permitted disparity under 2. If the BRF is an optional form of • Employer Identification Number (EIN). Regulations section 1.401(a)(4)-7 is benefit, ancillary benefit, or other right or imputed in determining employee benefit feature that has been aggregated, for Describe the benefit or allocation percentages. formula of the other plan and indicate if testing purposes, with another optional 6. An explanation of how allocation or form of benefit, ancillary benefit, or other that plan has received or applied for a

determination letter. accrual rates are grouped on the test. right or feature, respectively, show how 7. A description of how contributions or the requirements of Regulations section Demo 5 – Average Benefit Test 1.401(a)(4)-4(d)(4)(i)(A) and (B) are benefits are normalized, including

satisfied. 1. An applicant requesting a actuarial assumptions used.

3. Describe the group of employees to determination that a plan satisfies the 8. The definition of section 414(s)

whom the BRF is available and indicate if average benefit test must demonstrate compensation used in determining plan

compliance with the nondiscriminatory year compensation or average annual this group includes any nonexcludable

employees with accrued benefits who are classification test of Regulations section compensation and a demonstration

not currently benefiting (‘‘frozen plan 1.410(b)-4 including, if applicable, the showing the definition as

participants’’). facts and circumstances determination nondiscriminatory. If plan year

under Regulations section compensation or average annual 4. Demonstrate one of the following with 1.410(b)-4(c)(3). compensation is determined using a respect to the specified BRF: definition of compensation that satisfies The determination regarding the a. The group of employees to whom Regulations section 1.414(s)-1(c)(2) or (3) average benefit test is not available to a the benefit is currently available satisfies the explanation should state whether the plan that satisfies the ratio percentage the section 410(b) ratio percentage test. definition satisfies Regulations section test. b. The BRF has been prospectively 1.414(s)-1(c)(2) or (3). For guidance eliminated and satisfies the section The demonstration for the average pertaining to this demonstration, see the 410(b) ratio percentage test as of the benefit test should provide, for each guidelines under the Demo 9 instructions

elimination date. Highly Compensated Employee (HCE) on page 5 pertaining to nondiscriminatory

c. The BRF is available only to an and each Non-Highly Compensated compensation. Employee (NHCE) the compensation acquired group of employees and the 9. A description of the method of used in the test, the allocation or benefit requirements of Regulations sections determining compensation used in being tested and the actual benefit 1.401(a)(4)-4(d)(1)(i)(A) and (B) are determining employee benefit percentages. The average benefit satisfied. percentages. percentages for HCEs and NHCEs must d. The plan is a permissively 10. The testing age of employees (not be provided. aggregated plan and the BRF is a applicable to defined contribution plans

spousal benefit described in Regulations 2. A plan that is deemed to satisfy the testing on a contribution basis).

section 1.401(a)(4)-4(d)(5). average benefit percentage test under the Plans with Defined Benefit Plans special rule in Regulations section e. The plan is an ESOP and the BRF 1.410(b)-5(f) must demonstrate that the in the Testing Group is an investment diversification right or plan would satisfy the ratio percentage Plans with DBP’s in the testing group feature or distribution option available test if the excludable employee and must also provide the following only to all qualified participants (as mandatory disaggregation rules for information if applicable. defined in section 401(a)(28)(B)(iii)) or the collectively bargained and noncollectively 11. Show if accruals after normal failure of the BRF to satisfy current bargained employees did not apply. availability results solely from the retirement age are taken into account

restrictions of section 409(n). 3. In addition to the above information, and, if such accruals are disregarded as

the average benefit percentage provided in Regulations section f. The plan is a permissively demonstration must identify and describe 1.401(a)(4)-3(f)(3), the basis on which aggregated defined benefit/defined they are disregarded. contribution (DB/DC) plan; the BRF is not the method used for determining

a single sum benefit, loan, ancillary employee benefit percentages (see 12. Show if most valuable rates must be

benefit, or benefit commencement date Regulations sections 1.410(b)-5(d) and used under Regulations section

(including the availability of in-service (e)), include the information listed below, 1.410(b)-5(d)(7), and, if so, show how

withdrawals); the BRF is provided under under the heading All Plans, as those rates are determined.

only one type of plan; and the BRF is applicable. 13. Show if a defined benefit plan

currently available to all NHCEs in all The demonstration must include the disregards offsets described in

plans of the same type as the plan under portion of the coverage test showing the Regulations section 1.401(a)(4)-3(f)(9),

which it is provided. data used in the calculations and the give a description of such offsets, and

5. If the BRF is available to frozen plan calculations for each participant. show how they satisfy Regulations

participants, show how one of the Participants need not be identified. section 1.401(a)(4)-3(f)(9).

requirements in Regulations sections However, the IRS may request that 14. Show if any disability benefits are

1.401(a)(4)-4(d)(2)(i) through (iv) is additional information be submitted if taken into account in determining

satisfied. necessary. employees’ accrued benefits under

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Regulations section 1.401(a)(4)-3(f)(2), two or more component plans (such as provided in Regulations section 1.401(a)

and, if so, cite the plan provisions that profit-sharing, money purchase, 401(k) (4)-3(f)(3), provide the basis on which

permit these disability benefits to be taken and 401(m)) should show the allocations they are disregarded.

into account. or benefits under each component plan. 13. State whether early retirement

15. Show if any other special rules in 2. Identify each rate group under the plan window benefits are taken into account in

testing a plan for nondiscrimination in and include a demonstration of how each determining accrual rates and whether

amounts are applied. For example, the rate group satisfies section 410(b). If the such benefits are being disregarded

rules applicable to the determination of plan is a DBP that is being tested on the under Regulations section

benefits on other than a plan-year basis basis of the amount of benefits, rate 1.401(a)(4)-3(f)(4)(ii). Also provide the

described in Regulations section groups must be determined on the basis basis on which they are disregarded.

1.401(a)(4)-3(f)(6), the adjustments for of both normal and most valuable accrual 14. State whether any unpredictable certain plan distributions provided in rates which are expressed as a dollar contingent event benefits were taken into Regulations section 1.401(a)(4)-3(f)(7), amount or a percentage of compensation. account in determining accrual rates and the adjustment for certain qualified If the most valuable accrual rate is under Regulations section preretirement survivor annuity charges as determined in accordance with the special 1.401(a)(4)-3(f)(5) and provide the basis provided in Regulations section rule in Regulations section on which they are taken into account. 1.401(a)(4)-3(f)(8). 1.401(a)(4)-3(d)(3)(iv) (floor on most

valuable accrual rate), this must be 15. State whether the plan disregards 16. Plans with employee contributions indicated. offsets described in Regulations section not allocated to separate accounts: give a 1.401(a)(4)-3(f)(9), provide a description description of the method for determining 3. State whether the plan is being tested of such offsets, and show how they on a contributions or benefits basis. the employer-provided accrued benefit satisfy Regulations section under Regulations section 4. Provide the plan year being tested. 1.401(a)(4)-3(f)(9). 1.401(a)(4)-6(b) and the location of 5. Provide a description of the method of relevant plan provisions. If the method for 16. State whether any disability benefits determining allocation or accrual rates, determining the employer-provided are taken into account in determining and if the plan is tested on a benefits accrued benefit is the employees’ accrued benefits under basis, the measurement period and composition-of-workforce method, the Regulations section 1.401(a)(4)-3(f)(2), definition of testing service (including demonstration must show that the and if so, cite the plan provisions that imputed and pre-participation service). eligibility requirements of Regulations permit these disability benefits to be taken 6. State whether the test is imputing section 1.401(a)(4)-6(b)(2)(ii) are into account. permitted disparity under Regulations satisfied; if the grandfather rule of section 1.401(a)(4)-7. 17. State whether any other special rules Regulations section 1.401(a)(4)-6(b)(4) is in Regulations section 1.401(a)(4)-3(f) are 7. Provide an explanation of how used, the demonstration must show, if applied in testing a plan for allocation or accrual rates are grouped. applicable, that the benefits provided on nondiscrimination in amount, for example: account of employee contributions at 8. Provide an explanation of how benefits • The rules applicable to the lower levels of compensation are are normalized on the test, including the determination of benefits on other than a actuarial assumptions used (not comparable to those provided on account plan-year basis described in Regulations of employee contributions at higher levels applicable to defined contribution plans section 1.401(a)(4)-3(f)(6), of compensation. testing on a contributions basis). • The adjustment for certain plan 9. State the definition of section 414(s) distributions provided in Regulations Employee Benefit Percentages compensation used in determining plan section 1.401(a)(4)-3(f)(7), and Determined Using Cross-Testing year compensation or average annual • The adjustment for certain qualified

17. Provide a description of the method compensation and a demonstration preretirement survivor annuity charges as

used to determine equivalent allocations showing the definition as provided in Regulations section

and benefits. nondiscriminatory. If plan year 1.401(a)(4)-3(f)(8). compensation or average annual Demo 6 – General Test 18. Plans with employee contributions compensation is determined using a not allocated to separate accounts should A request for a determination that a plan definition of compensation that satisfies include: satisfies any of the general tests in Regulations sections 1.414(s)-1(c)(2) or • A description of the method for Regulations sections (3) state whether the definition satisfies determining whether employee-provided • 1.401(a)(4)-2(c), 1.414(s)-1(c)(2) or whether the definition accrued benefits are nondiscriminatory • 1.401(a)(4)-3(c), satisfies 1.414(s)-1(c)(3). See the under Regulations section • 1.401(a)(4)-8(b)(2), guidelines under the Demo 9 instructions 1.401(a)(4)-6(c), • 1.401(a)(4)-8(c)(2), pertaining to nondiscriminatory • The method for determining the • 1.401(a)(4)-8(c)(3)(iii)(C), or compensation for guidance pertaining to employer-provided accrued benefit under • 1.401(a)(4)-9(b) this demonstration. Regulations section 1.401(a)(4)-6(b), and must include a nondiscrimination test 10. Provide the method of determining • The location of relevant plan showing that the plan passes the relevant average annual compensation used in provisions. general test, and provide the information testing the plan for nondiscrimination as

listed under All Plans (unless otherwise If the method for determining the defined in Regulations section

noted), and if applicable, under Defined employer-provided accrued benefit is the 1.401(a)(4)-3(e)(2) or give a description of

Benefit Plans Only or Cross-Tested Plans composition-of-workforce method, the the period used in determining plan year

Only. However, the IRS may request that demonstration must show that the compensation.

additional information be submitted if eligibility requirements of Regulations 11. Provide the testing age of employees,

necessary. section 1.401(a)(4)-6(b)(2)(ii) are include fractions of year if test is based on satisfied.

All Plans (unless otherwise noted) fractional age (not applicable to a Defined

Contribution Plan (DCP) testing on a If the grandfather rule of Regulations All plans must submit the information contributions basis). section 1.401(a)(4)-6(b)(4) is used, the requested in items 1 through 11 (below). demonstration must show, if applicable, Defined Benefit Plans Only 1. Provide the portion of the that the benefits provided on account of

nondiscrimination test that provides the employee contributions at lower levels of All DBP’s must also provide the following

data for each participant and compensation are comparable to those information if applicable:

demonstrates that the plan satisfies 12. State whether accruals after normal provided on account of employee

section 401(a)(4). Participants need not retirement age are taken into account, contributions at higher levels of

be identified by name. Tests that include and if such accruals are disregarded as compensation.

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19. If the plan would otherwise fail to highly compensated nonexcludable section 401(a)(4). It should also state

satisfy the general test in Regulations employees. In addition, the demonstration whether all employees with zero total

section 1.401(a)(4)-3(c)(1), and a should provide the additional information compensation have been excluded from

determination is being sought that the described under Demo 6–General Test, the test. The demonstration should state

failure may be disregarded as permitted relating to the determination of normal the numbers of HCEs and NHCEs whose

by the special rule in Regulations section accrual rates, except for the information compensation is taken into account in the

1.401(a)(4)-3(c)(3), describe the relevant described in paragraphs numbered 1, 2, demonstration.

facts and circumstances that support the 6, 18, and 19. 5. For both the highly compensated and use of this rule. Demo 7 – Test for nonhighly compensated groups of

Cross-Tested Plans Only employees, it should state whether the Pre-participation or Imputed test uses an aggregate, individual, or 20. Provide a description of the method Service other reasonable method to calculate

used to determine equivalent allocations If a determination is being requested, inclusion percentages. If an “other” and benefits. attach a schedule that includes the method is used, this should be described.

21. For defined contribution plans, the following: 6. With regard to the determination of demonstration must list each participant’s 1. A description of the nature of the grant total compensation and compensation allocation rate for the plan being tested of past service or pre-participation or included under the definition being tested, and list the equivalent benefit accrual rate imputed service, the demonstration should:

(including component plans) for each 2. The location of the various plan a. Specify the section 415(c)(3) participant. provisions that provide for the granting of definition of compensation used in

Demo 6 – Safe Harbor for the service, and determining total compensation;

Uniform Points Plans 3. In the case of pre-participation or b. Indicate if total compensation

Each demonstration of the safe harbor for imputed service, state if the service is includes elective contributions and

being taken into account in determining if deferred compensation and, if applicable, uniform points plans in Regulations the plan satisfies Regulations section if and how the adjustment required by section 1.401(a)(4)-2(b)(3) should include 1.401(a)(4)-1(b)(2). Regulations section 1.414(s)-1(d)(3)(ii)(B) the following information:

Demo 8 – Test for Floor Offset has been made; and 1. Provide a description of the plan’s c. State if, for purposes of the test, allocation formula and the location of Arrangement compensation included under the relevant plan provisions. If a determination is being requested, definition being tested is limited to total 2. State the definition of section 414(s) attach a statement giving the name, EIN, compensation and if both total compensation used in determining plan and plan type (for example, defined compensation and compensation year compensation and give a benefit or profit-sharing) of the other plan included under the definition being tested demonstration showing the definition as that is part of the arrangement. are limited to amounts not in excess of nondiscriminatory. If the plan determines Also indicate if the other plan has the limit in section 401(a)(17). plan year compensation using a definition received a favorable determination letter 7. The demonstration should show, for of compensation that satisfies or is requesting a determination letter Regulations section 1.414(s)-1(c)(2) or both groups of employees, the respective simultaneously with this application. inclusion percentages, and also describe (3), state whether the definition satisfies Demo 9 – Nondiscriminatory the manner in which such inclusion 1.414(s)-1(c)(2) or (3).

Compensation percentages are determined. See the guidelines in Demo 9 below 8. Finally, if the HCEs inclusion pertaining to nondiscriminatory If a determination is being requested, a percentage is greater than the NHCEs compensation for guidance pertaining to demonstration that a definition of inclusion percentage, the demonstration this demonstration. compensation is nondiscriminatory under should set forth any facts relevant to 3. Provide the portion of the the test in Regulations section whether the difference is de minimis. nondiscrimination test that provides the 1.414(s)-1(d) should include the following

data for each participant and information: Demo 10 – Employer-Provided

demonstrates that the plan satisfies 1. It should state if the demonstration Benefit Method

section 401(a)(4). The data must include relates to a definition used to determine If a determination is being requested the units for each participant being tested contributions or benefits, or a definition attach a demonstration showing that the and the underlying basis for the units used in a section 401(k) and/or section eligibility requirements of Regulations such as age, years of service, or 401(m) plan’s ADP and/or ACP test. section 1.401(a)(4)-6(b)(2)(ii) are compensation. Show the allocation rate 2. It should state the definition of satisfied. If applicable, also indicate the for each eligible participant. Show the compensation being tested (and cite the plan factor. average of the allocation rates plan provision where applicable), and (determined without imputing permitted indicate whether the definition uses rate Demo 11 – Test to Show

disparity) for the highly compensated and of compensation or includes Employer-Provided Benefit is

for the nonhighly compensated prior-employer compensation or imputed Nondiscriminatory in Amount employees benefiting under the plan. compensation. If a determination is being requested

Demo 6 – Alternative Safe 3. It should identify the period for which attach a demonstration, if applicable, that

Harbor for Flat Benefit Plans compensation data is given. the benefits provided on account of

4. employee contributions at lower levels of It should state whether the test is Each demonstration of the alternative based on the compensation of all compensation are comparable to those safe harbor for flat benefit plans in employees benefiting under the plan or all provided on account of employee Regulations section employees benefiting under all plans of contributions at higher levels of 1.401(a)(4)-3(b)(4)(i)(C)(3) must set forth the employer for which the same compensation, as required by the average of the normal accrual rates alternative definition of compensation is Regulations section for all nonhighly compensated used to determine that the plan satisfies 1.401(a)(4)-6(c)(4)(ii)(D). nonexcludable employees and the

average of the normal accrual rates for all

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