3856 / Can a plan satisfy the IRC nondiscrimination requirements through aggregating multiple plans or restructuring the plan?

Under certain circumstances, a plan may be aggregated or combined with other plans or restructured (i.e., treated as two or more separate plans) for purposes of meeting the nondiscrimination in amount requirement. Where plans are restructured, each component plan must separately satisfy the nondiscrimination requirements and the coverage requirements ( Q 3842).¹

If two or more plans are permissively aggregated and treated as a single plan for purposes of satisfying the minimum coverage requirements ( Q 3842), the aggregated plans also must be treated as a single plan for purposes of meeting the nondiscrimination requirements.² The regulations include guidelines for determining whether several of these plans, when considered as a unit, provide contributions and benefits that discriminate in favor of highly compensated employees.

A disability plan that is not a pension, profit sharing, stock bonus, or annuity plan may not be aggregated with these plans for this purpose.³

Special rules are provided for applying the nondiscrimination requirements to an aggregated plan that includes both a defined benefit plan and a defined contribution plan.⁴ Special rules apply where an aggregated plan includes a new comparability plan ( Q 3862).⁵