FAQ 2150: 401(a)(4) testing and permitted disparity being set to 0%

Problem: Why is key employee set to 0% for permitted disparity but other ee is .70?

Solution: The annual permitted disparity factor is applied for each of the employee's the first 35 years of testing service. After 35 years, any subsequent year equals zero. This is in-line with C.F.R / Title 20 - Internal Revenue - 1.401(a)(4)-7 Imputation of permitted disparity.