For an employer benefit plan to be considered “qualified,” it must not discriminate in favor of highly compensated employees (HCEs). One employer sought to aggregate two plans for purposes of the nondiscrimination test: a cash balance plan which covered HCEs and non-HCEs, and a defined contribution plan that the employer contributed to for all employees ratably, based on compensation. Upon review, the IRS stated that the plans must satisfy the nondiscrimination test separately, and in this case the plans failed that test. (Chief Counsel Advice 201810008)
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