If you were to get challenged by that IRS agent someday for giving HCEs zero, you might want to point out to that IRS agent Ms Gold's February 4, 2005 letter to Graff and Ferrigno where she explained the scope and reach of her October 22, 2004 EP directive (emphasis added).
QUOTE
As the memo's discussion and examples demonstrate, the intent of the October 22, 2004 memorandum is to focus upon plans that attempt to satisfy the nondiscrimination tests by using nominal contributions or benefits for the lowest paid non-highly compensated employees where the nominal contributions or benefits result from very short periods of service. We believe that attempts to satisfy the nondiscrimination tests should and will fail where virtually all of the plan contributions or benefits, except for nominal contributions or benefits for these lowest-paid employees, are accrued by the highly compensated employees. The memo should be construed in light of this intent. We understand that some may question whether we are reversing positions on certain plan designs that the Service may previously have looked at favorably. However, the memorandum of October 22,2004, is not intended to suggest that plan designs that have been consistently and repeatedly approved by the Service are now in question. That memorandum is also not intended to address any possible concerns raised by this plan design under section 401(a)(26).