FAQ 804: Allocations--Can ASC use 3% of post-entry compensation in step 1 of a 4-tier integrated allocation?


Dear ASC,
We have a plan that is using 4-tiered integrated allocation. The definition of compensation for allocation purposes is post-entry compensation. We notice in step 1, ASC allocates 3% of total compensation, not 3% of post-entry compensation, even though the specs are coded for post-entry compensation. Is there a way to persuade ASC to use 3% of post-entry compensation in step 1?


When using the 4 tier option, the first tier is meant to cover top heavy and this will use top heavy compensation (which is full year compensation). You can override the one tier by overriding the COMP- Top Heavy Comp OR use the Compliance - TESTCOMP screen for overriding the Profit Sharing compensation but this would apply to the entire allocation. If there are any other sources used to offset top heavy contributions these will affect the calculation as well.

Ideally if you are not utilizing this for a top heavy scenario you would use the 3-On Compensation and code the integration on the parameters screen using the 2-tier method. This scenario will look first to the override screen and then use the Post Entry compensation not to exceed the 401(a)(17) compensation.