There's some great commentary on these forums on how 105(h) applies to specific situations. However, wouldn't 26 CFR 1.105-11(c)(4) (reproduced below) provide a work-around for many of the non-discrimination limitations on plan design?
For example, wouldn't 1.105-11(c)(4) allow an employer to setup a series of individual plans (all contained within one document) that provides differing benefit levels on the basis of job category, tenure, salary vs. hourly, and other reasonable and objective business classifications? Wouldn't it also allow the individual plans to impose differing waiting periods?
It's not a complete pass however. The way I understand it, if you use multiple plans and "reasonable and objective business classifications" (see 26 CFR 1.410(b)-4), you still have to pass one of the 1.410(b)-4 safe/unsafe Harbor percentage tests.
Does anyone have any insight on 1.105-11(c)(4) and the legislative history as to why this provision exists?
26 CFR 1.105-11(c)(4)
(4) Multiple plans, etc. (i) General rule. An employer may designate two or more plans as constituting a single plan that is intended to satisfy the requirements of section 105(h)(2) and paragraph (c) of this section, in which case all plans so designated shall be considered as a single plan in determining whether the requirements of such section are satisfied by each of the separate plans. A determination that the combination of plans so designated does not satisfy such requirements does not preclude a determination that one or more of such plans, considered separately, satisfies such requirements. A single plan document may be utilized by an employer for two or more separate plans provided that the employer designates the plans that are to be considered separately and the applicable provisions of each separate plan.
