This question has to do with the nondiscrimination requirement of 1.414(s)-(d)(3)(i) pertaining to an alternative definition of compensation.

The average percentage of total compensation included for HCE's cannot exceed the average percentage of compensation for NHCE's by more than a de minimis amount.

Has anyone had any experience with the IRS that indicates what they might think a de minimis amount is?

I was curious about the responses you might get.

I've had two DB plans audited within the last few years with comp definitions requiring 414(s) testing. In neither case did the auditor request the test.

Our firm has always taken the "high" road and only allowed for a 1-2% differential in the amount of compensation excluded by applying a custom definition of compensation.

Usually the only time that an alternate definition has worked for one of our clients is if all HCE's can control substantially how their comp is based (i.e. bonus, commission, etc.) Normally, this only works when there are 1 or 2 owners and they can set their comp in any fashion they want.