Form 5300 (Schedule Q)

Instructions for Schedule Q, (Form 5300) Elective
Determination Requests
(Rev. March 2010)
Purpose: This is the first circulated draft of March 2010 revision of the Instructions
for Schedule Q, (Form 5300) for your review and comments. See below for a
discussion of major changes.
TPCC Meeting: None, but one may be arranged if requested.
Prior Version: The August 2004 revision of the Instructions for Schedule Q, (Form
5300) is available at:
http://www.irs.gov/pub/irs-pdf/i5300q.pdf

Instructions: The March 2010 revision of the Schedule Q, (Form 5300) is attached.
Other Products: Circulations of draft tax forms, instructions, notices, and
publications are posted at:
http://taxforms.web.irs.gov/Circulations/index.htm.
Comments: Please email, fax, call, or mail any comments by March 9, 2010.
Comments submitted by telephone must be followed up in writing to be considered.
Send a copy of any email comments to the forms reviewer, Jason Langley at
[email protected].

Major Changes
We have revised this form per instructions from TEGE/EP.
Line 2 is now obsolete and is marked as reserved, the instructions for line 2 have
been removed.
Trene’ D Cheek
Tax Law Specialist
Tax Forms and Publications
SE:W:CAR:MP:T:T:FP
Email: [email protected]
Phone: 202-283-2225
Fax: 202-283-4437

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Instructions for Schedule Q (Form 5300)

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Instructions for Schedule Q
(Form 5300)

Department of the Treasury
Internal Revenue Service

(Rev. March 2010)
Elective Determination Requests
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New

• Line 2 has been obsoleted. It will be
deleted in the next revision.
• A request for a description of the
gateway requirements under
Regulations section 1.401(a)(4)-8 has
been added. See Cross -Tested Plans
Only under Demo 6 - General Test.
• Due to processing requirements,
fillable fields (Plan Sponsor, EIN, and
Name of Plan) are now limited to a
certain number of characters, including
spaces.

What to Complete
If you elect to use this form, complete
all lines unless otherwise directed.
Note. Applicants requesting specific
determinations are required to submit
demonstrations showing how their
plans satisfy the minimum participation,
coverage, and nondiscrimination
requirements, as applicable. The
demonstrations are explained in these
instructions. Information or
computations used for more than one
purpose may not be cross-referenced
but must be repeated for each
applicable demonstration.

General Instructions Specific Instructions
Purpose of Schedule
Schedule Q (Form 5300) allows you to
indicate whether you wish certain
qualification requirements relating to
minimum participation, coverage, and
nondiscrimination to be considered by
the IRS in its review of your plan in
conjunction with an application for
determination letter.

Who May File
The use of this form is optional.
However, filers of Form 5300,
Application for Determination for
Employee Benefit Plan; Form 5307,
Application for Determination for
Adopters of Master or Prototype or
Volume Submitter Plans; and Form
5310, Application for Determination for
Terminating Plan, may elect to
complete and file Schedule Q (Form
5300) with their application to broaden
the scope of a determination letter by
requesting determinations for certain
coverage and nondiscrimination
requirements that are not routinely
addressed in conjunction with an
application for determination letter.
Note. If Schedule Q is not filed, the
determination letter issued for this plan
will not consider and may not be relied
upon with regard to the general test
and certain other provisions under
section 401(a)(4), the average benefit
test under section 410(b), and the
definition of compensation provisions of
section 414(s).

Minimum Participation, Coverage, and
Nondiscrimination Requirements
Line 1. If “Yes” is checked, attach
Demo 1 to show how a plan using the
qualified separate lines of business
rules of section 414(r) satisfies the
gateway test of section 410(b)(5)(B) or
satisfies the special rules for
employer-wide plans. See Guidelines
for Certain Demonstrations on page 2.
Note. If a request for an administrative
scrutiny determination on any separate
line of business of the employer is
pending with the IRS, submit a copy of
the confirmation receipt issued by the
IRS with the application.
Line 3. Determination letters generally
do not provide reliance that benefits,
rights, and features under a plan satisfy
the nondiscriminatory current
availability requirement of Regulations
section 1.401(a)(4)-4(b).
Answer “Yes” only if you are
requesting a determination that any
specified benefit, right, or feature meets
the nondiscriminatory current
availability requirement of Regulations
section 1.401(a)(4)-4(b). If “Yes” is
checked, attach Demo 3 to provide a
demonstration for each benefit, right,
and feature you wish considered. Also
see Guidelines for Certain
Demonstrations on page 2.
Line 4. Check “Yes” and attach Demo
4 if any of the following apply.
1. The plan is restructured into
component plans under Regulations
section 1.401(a)(4)-9.
Cat. No. 22189C

2. The plan is disaggregated
because:
a. The plan includes a section
401(k) or 401(m) plan and a portion
that is not a section 401(k) or 401(m)
plan,
b. The plan includes an ESOP and
a portion that is not an ESOP,
c. The employer applies section
410(b) separately to the portion of the
plan that benefits only employees who
satisfy age and service conditions
under the plan that are lower than the
greatest minimum age and service
conditions permissible under section
410(a),
d. The plan benefits employees of
more than one qualified separate line of
business (unless the plan is tested
under the special rule for
employer-wide plans in Regulations
section 1.414(r)-1(c)(2)(ii)),
e. The plan benefits the
noncollectively bargained employees of
more than one employer, or
f. The plan benefits both
collectively bargained and
noncollectively bargained employees.
3. The plan is permissively
aggregated with another plan under
Regulations section 1.410(b)-7(d).
Note. If you are requesting a
determination that the plan satisfies the
average benefit test of section 410(b)
or the nondiscrimination requirements
of section 401(a)(4) and if any of the
conditions above apply attach a Demo
4.
See Guidelines for Certain
Demonstrations on page 2. Also, see
the instructions for line 9 for additional
information that may be required in
Demo 4.
Line 5. This line is a request for a
determination that the plan satisfies the
minimum coverage requirements of
section 410(b) due to satisfying the
average benefit test of Regulations
section 1.410(b)-2(b)(3).
If a determination regarding the
average benefit test is being requested,
check “Yes” and see instructions for
Demo 5 under Guidelines for Certain
Demonstrations.
This determination relates only to the
satisfaction of the requirements of
section 410(b). This determination is

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mutually exclusive of any determination
that the plan may satisfy section
401(a)(4). If the plan must satisfy a
general test in order to satisfy section
401(a)(4), a determination that the plan
satisfies the average benefit test is not
a determination that the plan’s rate
groups satisfy the modified average
benefit test that is included in the
general test.
Line 6. This is exclusively a request
for a determination that the plan
satisfies the nondiscrimination in
amount or benefits requirements under
section 401(a)(4) using a
nondesign-based safe harbor or a
general test. This determination is
mutually exclusive of any determination
that the plan may satisfy section
410(b).
If this is a request for a
determination regarding a
nondesign-based safe harbor or a
general test, see the instructions for
Demo 6 under Guidelines for Certain
Demonstrations. The Demo 6 must
show that the plan satisfies either:
1. The contributions or benefits
general test in Regulations sections:
• 1.401(a)(4)-2(c),
• 1.401(a)(4)-3(c),
• 1.401(a)(4)-8(b)(2),
• 1.401(a)(4)-8(c)(2),
• 1.401(a)(4)-8(c)(3)(iii)(C), or
• 1.401(a)(4)-9(b).
2. The nondesign-based safe
harbors described in Regulations
section 1.401(a)(4)-2(b)(3) (safe harbor
for uniform point plans) or Regulations
section 1.401(a)(4)-3(b)(4)(i)(C)(3)
(alternative safe harbor for flat benefit
plans).
Also enter the letter in the space
provided on line 6 that indicates if the
determination requested relates to:
1. A Defined Benefit Plan (DBP)
being tested under the general test in
Regulations section 1.401(a)(4)-3(c)
that involves a facts and circumstances
determination under the “safety valve”
rule in Regulations section
1.401(a)(4)-3(c)(3);
2. A plan being tested under a
general test that does not involve a
determination under the safety valve
rule; or
3. A plan intended to satisfy a
nondesign-based safe harbor.
Line 7. Check “Yes” on line 7(i) and
attach Demo 7 if a determination is
being requested regarding any plan
provision which provides for
pre-participation or imputed service as
defined in Regulations section
1.401(a)(4)-11(d)(3)(ii).
Check “Yes” on line 7(ii) and attach
Demo 7 if a determination is being
requested for a plan amendment or, in

the case of an initial determination, a
plan provision which provides for a
period of past service that exceeds the
period set forth in the safe harbor in
Regulations section 1.401(a)(4)-5(a)(3).
Do not check “Yes” if past service,
pre-participation service, or imputed
service is credited under the plan solely
to the extent required by one or more of
the following:
1. The service crediting rules under
sections 410(a) (eligibility), 411(a)
(vesting), 413 (collectively bargained
plans), or 414(a) (service for
predecessor employer);
2. The hour of service or elapsed
time service-crediting methods under
29 CFR 2530.200b-2 and Regulations
section 1.410(a)-7; and
3. The prohibition on double
proration of service and compensation
in 29 CFR section 2530.204-2(d).
See the instructions for Demo 7
under Guidelines for Certain
Demonstrations.
Line 8. Check “Yes” and attach Demo
8 if a determination is being requested
for a plan that is part of a floor
arrangement. See the instructions for
Demo 8 under Guidelines for Certain
Demonstrations.
Nondiscriminatory Compensation
and Employee Contributions
Line 9. Check “Yes” and attach Demo
9 if a determination is being requested
in which any of the following apply:
1. The plan bases contributions or
benefits on a definition of compensation
that does not satisfy the requirements
of Regulations sections 1.414(s)-1(c)(2)
or (3); or
2. The plan includes a section
401(k) and/or section 401(m) plan that
incorporates an actual deferral
percentage or actual contribution
percentage test using a definition of
compensation that does not satisfy the
requirements of Regulations sections
1.414(s)-1(c)(2) or (3).
If this plan has been disaggregated
into separate plans or restructured into
component plans, this line may be
checked “Yes” to request a
determination if any of the separate
disaggregated plans or restructured
component plans are described in 1. or
2. above. Also complete Demo 4 and
indicate on the Demo 4 each
disaggregated plan or component plan
to which 1. or 2. applies.
Note. Sections 401(k) and 401(m)
plans may not be restructured.
See the instructions for Demo 9
under Guidelines for Certain
Demonstrations.
Line 10. Check “Yes” if this is a DBP
and a determination is being requested

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regarding employee contributions not
allocated to separate accounts.
Line 11. Enter the letter shown on the
schedule that corresponds to the
method being used to determine the
employer-provided benefit for purposes
of Regulations section 1.401(a)(4)-6(b).
The composition-of-workforce and
minimum benefit methods may only be
used with plans that satisfy the unit
credit safe harbor in Regulations
section 1.401(a)(4)-3(b)(3).
If you enter the letter “A,” attach
Demo 10 and see the instructions for
Demo 10 under Guidelines for Certain
Demonstrations. If applicable, also
indicate the plan factor.
Line 12. Enter the letter that
corresponds to the method used to
show that the employee-provided
benefit is nondiscriminatory in amount.
See Regulations section
1.401(a)(4)-6(c).
If you enter the letter “C,” attach
Demo 11. See the instructions for
Demo 11 under Guidelines for Certain
Demonstrations.

Guidelines For Certain
Demonstrations
The following instructions describe
additional information that must be
included in the demonstrations.
Note. Applicants must follow these
instructions and indicate in their
demonstrations where the elements in
the guidelines are addressed.
Applicants must explain why any
elements have not been addressed.
Information or computations that are
used for more than one purpose or
provided elsewhere in the application
may not be cross-referenced.
Clearly label each demonstration as
Demo 1, Demo 2, etc.

Demo 1 – Qualified Separate
Lines of Business
Provide a schedule with the following
information, as applicable:
1. The Code section(s) for which the
employer is testing on a separate line
of business basis (i.e., section 410(b) or
section 401(a)(26)),
2. The separate lines of business
that have employees benefiting under
the plan,
3. A demonstration of how the plan
meets the nondiscriminatory
classification requirement of section
410(b)(5)(B) and Regulations section
1.414(r)-8(b)(2) on an employer-wide
basis, and
4. If the requirements of section
410(b) or section 401(a)(26) are to be
applied to this plan on an

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employer-wide basis under the special
rules for employer-wide plans, a
demonstration of how the plan meets
the requirements of the applicable
special rule in Regulations section
1.414(r)-1(c)(2)(ii) or Regulations
section 1.414(r)-1(c)(3)(ii).

Demo 2
Line 2 has been obsoleted, so a
demonstration is not required.

Demo 3 – Nondiscriminatory
Current Availability of
Benefits, Rights and
Features
1. An applicant requesting a
determination that a plan satisfies the
nondiscriminatory current availability
requirement of Regulations section
1.401(a)(4)-4(b) for any benefit, right, or
feature (BRF) specified by the applicant
should ordinarily demonstrate the
following for each BRF that the
applicant wants considered:
a. Identify the specific BRF,
including terms pertaining to the BRF,
such as eligibility conditions, timing,
election rights, etc.;
b. Cite the plan provisions that
describe the BRF and all terms relating
to the BRF;
c. Describe any conditions on the
availability of the BRF that were
disregarded in determining current
availability;
d. If the BRF is contingent on an
unpredictable event, describe the
contingency and determine current
availability as if the event had occurred;
and
e. If applicable, describe how the
special rule in Regulations section
1.401(a)(4)-4(d)(3), relating to early
retirement window benefits, has been
applied;
2. If the BRF is an optional form of
benefit, ancillary benefit, or other right
or feature that has been aggregated for
testing purposes with another optional
form of benefit, ancillary benefit, or
other right or feature, respectively,
show how the requirements of
Regulations section
1.401(a)(4)-4(d)(4)(i)(A) and (B) are
satisfied.
3. Describe the group of employees
to whom the BRF is available and
indicate if this group includes any
nonexcludable employees with accrued
benefits who are not currently
benefiting (“frozen plan participants”).
4. Demonstrate one of the following
with respect to the specified BRF:
a. The group of employees to whom
the benefit is currently available
satisfies the section 410(b) ratio
percentage test;

b. The BRF has been prospectively
eliminated and satisfies the section
410(b) ratio percentage test as of the
elimination date;
c. The BRF is available only to an
acquired group of employees, and the
requirements of Regulations sections
1.401(a)(4)-4(d)(1)(i)(A) and (B) are
satisfied;
d. The plan is a permissively
aggregated plan, and the BRF is a
spousal benefit described in
Regulations section 1.401(a)(4)-4(d)(5);
e. The plan is an ESOP, and the
BRF is an investment diversification
right or feature or distribution option
available only to all qualified
participants (as defined in section
401(a)(28)(B)(iii)) or the failure of the
BRF to satisfy current availability
results solely from the restrictions of
section 409(n); or
f. The plan is a permissively
aggregated defined benefit/defined
contributions plan; the BRF is not a
single sum benefit, loan, ancillary
benefit, or benefit commencement date
(including the availability of in-service
withdrawals); the BRF is provided
under only one type of plan; and the
BRF is currently available to all
non-highly compensated employees
(NHCEs) in all plans of the same type
as the plan under which it is provided.
5. If the BRF is available to frozen
plan participants, show how one of the
requirements in Regulations sections
1.401(a)(4)-4(d)(2)(i) through (iv) is
satisfied.

Demo 4 – Test for
Restructuring, Mandatory
Disaggregation, or
Permissive Aggregation
Explain the basis of the disaggregation,
permissive aggregation, or
restructuring, identifying the aggregated
or separate disaggregated plans or
component plans, and demonstrate
how any restructured component plans
satisfy section 410(b) as if they were
separate plans.
Any other plan that has been
permissively aggregated with this plan
should be identified by:
• name,
• plan number, and
• Employer Identification Number
(EIN).
Describe the benefit or allocation
formula of the other plan and indicate if
that plan has received or been
submitted for a determination letter.

Demo 5 – The Average
Benefit Percentage Test
Demo 5 must satisfy the following
requirements.

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1. An applicant requesting a
determination that a plan satisfies the
average benefit test must demonstrate
compliance with the nondiscriminatory
classification test of Regulations section
1.410(b) including, if applicable, the
facts and circumstances determination
under Regulations section
1.410(b)-4(c)(3).
Note. The determination regarding the
average benefit test is not available to a
plan that satisfies the ratio percentage
test.
The demonstration for the average
benefit test should provide, for each
highly compensated employee (HCE)
and each non-highly compensated
employee (NHCE), the compensation
used in the test, the allocation or
benefit being tested, and the actual
benefit percentages. The average
benefit percentages for HCEs and
NHCEs must be provided.
2. A plan that is deemed to satisfy
the average benefit percentage test
under the special rule in Regulations
section 1.410(b)-5(f) must demonstrate
that the plan would satisfy the ratio
percentage test if the excludable
employee and mandatory
disaggregation rules for collectively
bargained and noncollectively
bargained employees did not apply.
3. In addition to the above
information, the average benefit
percentage demonstration must identify
and describe the method used for
determining employee benefit
percentages under Regulations
sections 1.410(b)-5(d) and (e),
including the information listed below,
under All Plans, as applicable.
Note. The demonstration must include
the portion of the coverage test
showing the data used in the
calculations and the calculations for
each participant. Participants need not
be identified. However, the IRS may
request that additional information be
submitted if necessary.

All Plans
All plans using the average benefit test
must also include the following
information on Demo 5.
1. The testing period (see
Regulations section 1.410(b)-5(e)(5) for
an optional averaging rule).
2. The definition of testing service
(including imputed and pre-participation
service).
3. A description of the testing group
(see Regulations section 1.410(b)-7(e)).
4. Whether the employee benefit
percentages are determined on a
contributions or benefits basis.
5. Whether permitted disparity
under Regulations section 1.401(a)(4)-7

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is imputed in determining employee
benefit percentages.
6. An explanation of how allocation
or accrual rates are grouped on the
test.
7. A description of how contributions
or benefits are normalized on the test,
including the actuarial assumptions
used.
8. The definition of section 414(s)
compensation used in determining plan
year compensation or average annual
compensation and a demonstration
showing the definition as
nondiscriminatory. If plan year
compensation or average annual
compensation is determined using a
definition of compensation that satisfies
Regulations sections 1.414(s)-1(c)(2) or
(3), the explanation should state
whether the definition satisfies
Regulations sections 1.414(s)-1(c)(2) or
(3). See the instructions under Demo 9
on page 6 pertaining to
nondiscriminatory compensation.
9. A description of the method of
determining compensation used in
determining employee benefit
percentages.
10. The testing age of employees
(not applicable to defined contribution
plans (DCPs) testing on a contribution
basis).
Plans with Defined Benefits Plans
in the Testing Group
Plans with DBPs in the testing group
must also provide the following
information if applicable.
11. Show if accruals after normal
retirement age are taken into account
and, if such accruals are disregarded
as provided in Regulations section
1.401(a)(4)-3(f)(3), the basis on which
they are disregarded.
12. Show if most valuable rates must
be used under Regulations section
1.410(b)-5(d)(7), and, if so, show how
those rates are determined.
13. Show if a DBP disregards offsets
described in Regulations section
1.401(a)(4)-3(f)(9), give a description of
such offsets, and show how they satisfy
Regulations section 1.401(a)(4)-3(f)(9).
14. Show if any disability benefits are
taken into account in determining
employees’ accrued benefits under
Regulations section 1.401(a)(9)-3(f)(2),
and, if so, cite the plan provisions that
permit these disability benefits to be
taken into account.
15. Show if any other special rules in
testing a plan for nondiscrimination in
amounts are applied, for example, the
rules applicable to the determination of
benefits on other than a plan-year basis
described in Regulations section
1.401(a)(4)-3(f)(6), the adjustments for
certain plan distributions provided in
Regulations section 1.401(a)(4)-3(f)(7),
and the adjustment for certain qualified

preretirement survivor annuity charges
as provided in Regulations section
1.401(a)(4)-3(f)(8).
16. Plans with employee
contributions not allocated to separate
accounts must give a description of the
method for determining the
employer-provided accrued benefit
under Regulations section
1.401(a)(4)-6(b) and the location of
relevant plan provisions. If the method
for determining the employer-provided
accrued benefit is the composition-ofworkforce method, the demonstration
must show that the eligibility
requirements of Regulations section
1.401(a)(4)-6(b)(2)(ii) are satisfied. If
the grandfather rule of Regulations
section 1.401(a)(4)-6(b)(4) is used, the
demonstration must show, if applicable,
that the benefits provided on account of
employee contributions at lower levels
of compensation are comparable to
those provided on account of employee
contributions at higher levels of
compensation.
Employee Benefit Percentages
Determined Using Cross-Testing
17. Provide a description of the
method used to determine equivalent
allocations and benefits on the test.

Demo 6 – General Test
Demo 6 covers a request for a
determination that a plan satisfies a
general test under any of the following
Regulations sections:
• 1.401(a)(4)-2(c),
• 1.401(a)(4)-3(c),
• 1.401(a)(4)-8(b)(2),
• 1.401(a)(4)-8(c)(2),
• 1.401(a)(4)-8(c)(3)(iii)(C), or
• 1.401(a)(4)-9(b).
Demo 6 must include a
nondiscrimination test showing that the
plan passes the relevant general test
and provide the information listed below
All Plans (unless otherwise noted), and
if applicable, under Defined Benefit
Plans Only or Cross-Tested Plans Only.
However, the IRS may request that
additional information be submitted if
necessary.

All Plans (Unless Otherwise
Noted)
All plans must submit the information
requested in items 1 through 11 below.
1. Provide the portion of the
nondiscrimination test that provides the
data for each participant and
demonstrates that the plan satisfies
401(a)(4). Participants need not be
identified by name. Tests that include
two or more component plans (such as
profit sharing, money purchase, 401(k)
and 401(m)) should separately show
the allocations or benefits under each
component plan.

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2. Identify each rate group under
the plan and include a demonstration of
how each rate group satisfies section
410(b). If the plan is a DBP that is
being tested on the basis of the amount
of benefits, rate groups must be
determined on the basis of both normal
and most valuable accrual rates which
are expressed as a dollar amount or a
percentage of compensation. If the
most valuable accrual rate is
determined in accordance with the
special rule in Regulations section
1.401(a)(4)-3(d)(3)(iv) (floor on most
valuable accrual rate), this must be
indicated.
3. State whether the plan is being
tested on a contributions or benefits
basis.
4. Provide the plan year being
tested.
5. Provide a description of the
method of determining allocation or
accrual rates, and if the plan is tested
on a benefits basis, the measurement
period and definition of testing service
(including imputed and pre-participation
service).
6. State whether the test is imputing
permitted disparity under Regulations
section 1.401(a)(4)-7.
7. Provide an explanation of how
allocation or accrual rates are grouped.
8. Provide an explanation of how
benefits are normalized on the test,
including the actuarial assumptions
used (not applicable to DCPs testing on
a contributions basis).
9. State the definition of section
414(s) compensation used in
determining plan year compensation or
average annual compensation and
include a demonstration showing the
definition as nondiscriminatory. If plan
year compensation or average annual
compensation is determined using a
definition of compensation that satisfies
Regulations sections 1.414(s)-1(c)(2) or
(3), state whether the definition satisfies
Regulations section 1.414(s)-1(c)(2) or
section 1.414(s)-1(c)(3). See the Demo
9 instructions pertaining to
nondiscriminatory compensation for
guidance.
10. Provide the method of
determining average annual
compensation used in testing the plan
for nondiscrimination as defined in
Regulations section 1.401(a)(4)-3(e)(2)
or give a description of the period used
in determining plan year compensation.
11. Provide the testing age of
employees, include fractions of year if
the test is based on fractional age (not
applicable to a DCP testing on a
contributions basis).
Defined Benefit Plans Only
All DBPs must also provide the
following information, if applicable.

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12. State whether accruals after
normal retirement age are taken into
account, and if such accruals are
disregarded as provided in Regulations
section 1.401(a)(4)-3(f)(3), provide the
basis on which they are disregarded.
13. State whether early retirement
window benefits are taken into account
in determining accrual rates and
whether such benefits are being
disregarded under Regulations section
1.401(a)(4)-3(f)(4)(ii). Also provide the
basis on which they are disregarded.
14. State whether any unpredictable
contingent event benefits were taken
into account in determining accrual
rates under Regulations section
1.401(a)(4)-3(f)(5) and provide the
basis on which they are taken into
account.
15. State whether the plan disregards
offsets described in Regulations section
1.401(a)(4)-3(f)(9), provide a
description of such offsets, and show
how they satisfy Regulations section
1.401(a)(4)-3(f)(9).
16. State whether any disability
benefits are taken into account in
determining employees’ accrued
benefits under Regulations section
1.401(a)(4)-3(f)(2), and if so, cite the
plan provisions that permit these
disability benefits to be taken into
account.
17. State whether any other special
rules in Regulations section
1.401(a)(4)-3(f) are applied in testing a
plan for nondiscrimination in amount,
for example:
• The rules applicable to the
determination of benefits on other than
a plan-year basis described in
Regulations section 1.401(a)(4)-3(f)(6),
• The adjustment for certain plan
distributions provided in Regulations
section 1.401(a)(4)-3(f)(7), and
• The adjustment for certain
qualified preretirement survivor annuity
charges as provided in Regulations
section 1.401(a)(4)-3(f)(8).
18. Plans with employee contribution
not allocated to separate accounts
should include:
• A description of the method for
determining whether
employee-provided accrued benefits
are nondiscriminatory under
Regulations section 1.401(a)(4)-6(c),
• The method for determining the
employer-provided accrued benefit
under Regulations section
1.401(a)(4)-6(b), and
• The location of relevant plan
provisions.
If the method for determining the
employer-provided accrued benefit is
the composition-of-workforce method,
the demonstration must show that the
eligibility requirements of Regulations
section 1.401(a)(4)-6(b)(2)(ii) are
satisfied.

If the grandfather rule of Regulations
section 1.401(a)(4)-6(b)(4) is used, the
demonstration must show, if applicable,
that the benefits provided on account of
employee contributions at lower levels
of compensation are comparable to
those provided on account of employee
contributions at higher levels of
compensation.
19. If the plan would otherwise fail to
satisfy the general test in Regulations
section 1.401(a)(4)-3(c)(1), and a
determination is being sought that the
failure may be disregarded as permitted
by the special rule in Regulations
section 1.401(a)(4)-3(c)(3), describe the
relevant facts and circumstances that
support the use of this rule.
Aggregated Defined Benefit and
Defined Contribution Plans Only
20. If a DBP is aggregated with a
DCP, provide a description of the
special testing rules outlined in
Regulations section 1.401(a)(4)-9(b).
The description should provide:
• Which test is being satisfied and
supporting demonstrations of
satisfaction,
• If using the minimum amount test,
provide the DB and DC information and
rates separately, and
• State whether the NHCE rates are
averaged or tested separately.
Cross-Tested Plans Only
21. Provide a description of the
gateway requirements of Regulations
section 1.401(a)(4)-8. The description
should provide:
• Which test is being satisfied,
• If using the minimum amount test,
provide the DB and DC information and
rates separately, and
• State whether the NHCE rates are
averaged or tested separately.
22. Provide a description of the
method used to determine equivalent
allocations and benefits.
23. For DCPs, the demonstration
must list each participant’s allocation
rate for the plan being tested and list
the equivalent benefit accrual rate
(including component plans) for each
participant.

Demo 6 – Safe Harbor for
Uniform Points Plans
Each demonstration of the safe harbor
for uniform points plans in Regulations
section 1.401(a)(4)-2(b)(3) should
include the following information:
1. Provide a description of the
plan’s allocation formula and the
location of relevant plan provisions.
2. State the definition of section
414(s) compensation used in
determining plan year compensation
and give a demonstration showing the
definition as nondiscriminatory. If the
plan determines plan year

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compensation using a definition of
compensation that satisfies Regulations
section 1.414(s)-1(c)(2) or (3), state
whether the definition satisfies
Regulations section 1.414(s)-1(c)(2) or
(3).
See the instructions for Demo 9,
later, pertaining to nondiscriminatory
compensation for guidance.
3. Provide the portion of the
nondiscrimination test that provides the
data for each participant and
demonstrates that the plan satisfies
section 401(a)(4). The data must
include the units for each participant
being tested and the underlying basis
for the units such as age, years of
service, or compensation. Show the
allocation rate for each eligible
participant. Show the average of the
allocation rates (determined without
imputing permitted disparity) for the
HCEs and NHCEs benefiting under the
plan.

Demo 6 – Alternative Safe
Harbor for Flat Benefit Plans
Each demonstration of the alternative
safe harbor for flat benefit plans in
Regulations section
1.401(a)(4)-3(b)(4)(i)(C)(3) must set
forth the average of the normal accrual
rates for all nonhighly compensated
nonexcludable employees and the
average of the normal accrual rates for
all highly compensated nonexcludable
employees. In addition, the
demonstration should provide the
additional information described under
“Demo 6 – General Test,” relating to the
determination of normal accrual rates,
except for the information described in
paragraphs 1, 2, 6, 18, and 19.

Demo 7 – Test for
Pre-participation or Imputed
Service
If “Yes” is checked on line 7(i) or 7(ii),
attach a demonstration that includes
the following:
1. A description of the nature of the
grant of past service or pre-participation
or imputed service,
2. The location of the various plan
provisions that provide for the granting
of the service, and
3. In the case of pre-participation or
imputed service, state if the service is
being taken into account in determining
if the plan satisfies Regulations section
1.401(a)(4)-1(b)(2).
Note. The information provided should
also include who receives the credit,
classification, and how many years are
being credited. The information should
also provide which employees are
highly compensated and which are not.

Page 6 of 6

Instructions for Schedule Q (Form 5300)

9:35 - 23-FEB-2010

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If no more than 5 years of service is
granted, then Regulations section
1.401(a)(4)-11(d)(3) is satisfied and no
Demo 7 is needed.

Demonstration 8 – Test for
Floor Offset Arrangement
If a determination is being requested
attach a statement giving the name,
EIN, and plan type (for example,
defined benefit or profit sharing) of the
other plan that is part of the
arrangement.
Also indicate if the other plan has
received a favorable determination
letter or is requesting a determination
letter simultaneously with this
application.

Demo 9 – Nondiscriminatory
Compensation
If a determination is being requested, a
demonstration that a definition of
compensation is nondiscriminatory
under the test in Regulations section
1.414(s)-1(d) should include the
following information.
1. It should state if the
demonstration relates to a definition
used to determine contributions or
benefits or a definition used in a section
401(k) and/or section 401(m) plan’s
ADP and/or ACP test.
2. It should state the definition of
compensation being tested (and cite
the plan provision where applicable)
and indicate whether the definition uses
rate of compensation or includes
prior-employer compensation or
imputed compensation.
3. It should identify the period for
which compensation data is given.
4. It should state whether the test is
based on the compensation of all

employees benefiting under the plan or
all employees benefiting under all plans
of the employer for which the same
alternative definition of compensation is
used to determine that the plan
satisfies section 401(a)(4). It should
also state whether all employees with
zero total compensation have been
excluded from the test. The
demonstration should state the
numbers of HCEs and NHCEs whose
compensation is taken into account in
the demonstration.
5. For both the highly compensated
and nonhighly compensated groups of
employees, it should state whether the
test uses an aggregate, individual, or
other reasonable method to calculate
inclusion percentages. If an ‘‘other’’
method is used, it should be described.
6. With regard to the determination
of total compensation and
compensation included under the
definition being tested, the
demonstration should:
a. Specify the section 415(c)(3)
definition of compensation used in
determining total compensation;
b. Indicate if total compensation
includes elective contributions and
deferred compensation and, if
applicable, if and how the adjustment
required by Regulations section
1.414(s)-1(d)(3)(ii)(B) has been made;
and
c. State if, for purposes of the test,
compensation included under the
definition being tested is limited to total
compensation and if both total
compensation and compensation
included under the definition being
tested are limited to amounts not in
excess of the limit in section 401(a)(17).

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7. The demonstration should show,
for both groups of employees, the
respective inclusion percentages and
also describe the manner in which such
conclusion percentages are
determined.
8. Finally, if the HCE’s inclusion
percentage is greater than the NHCE’s
inclusion percentage, the
demonstration should set forth any
facts relevant to whether the difference
is de minimis. If the amount is not de
minimis then Demo 6 can be submitted
to show that the definition is
non-discriminatory.

Demo 10 –
Employer-Provided Benefit
Method
If a determination is being requested,
attach a demonstration showing that
the eligibility requirements of
Regulations section
1.401(a)(4)-6(b)(2)(ii) are satisfied. If
applicable, also indicate the plan factor.

Demo 11 – Test to Show
Employer-Provided Benefit Is
Nondiscriminatory in
Amount
If a determination is being requested,
attach a demonstration, if applicable,
that the benefits provided on account of
employee contributions at lower levels
of compensation are comparable to
those provided on account of employee
contributions at higher levels of
compensation, as required by
Regulations section
1.401(a)(4)-6(c)(4)(ii)(D).