An accounting firm’s seasonal workforce belongs in the census review. A modest owner rate can produce a gateway below 5%, but eligibility and testing determine the final allocations.
The business and its goal
A 56-year-old firm owner earns $250,000 of confirmed eligible compensation and wants a $30,000 employer contribution. Four year-round employees and one seasonal employee are eligible for the illustrated allocation. Their compensation totals $240,000.
What the allocation could look like
| Participant | Age | Compensation | Rate | Employer dollars |
|---|---|---|---|---|
| Firm owner | 56 | $250,000 | 12% | $30,000 |
| Staff accountant A | 28 | $60,000 | 4% | $2,400 |
| Staff accountant B | 32 | $50,000 | 4% | $2,000 |
| Bookkeeper | 35 | $40,000 | 4% | $1,600 |
| Office manager | 39 | $50,000 | 4% | $2,000 |
| Seasonal employee | 25 | $40,000 | 4% | $1,600 |
| Total | — | $490,000 | — | $39,600 |
The owner receives $30,000 and employees receive $9,600, for $39,600 total. One-third of the owner’s 12% rate is 4%, so 5% is not automatically the starting minimum in this case. The allocation must still pass the remaining tests.
Illustration assumptions: A standalone defined contribution plan; all people shown are eligible for the illustrated employer contribution; owners and other specifically identified HCEs are highly compensated employees; remaining staff are non-highly compensated employees (NHCEs). Compensation is eligible plan compensation. Employer dollars include any safe harbor nonelective contribution; employee deferrals, catch-ups, matching contributions and fees are excluded unless stated. These are fictional planning examples, not completed nondiscrimination tests. Final allocations may differ.
The seasonal employee changes the budget
Leaving out the seasonal employee would understate the illustrated employer contribution by $1,600. In an actual plan, eligibility and allocation conditions must be reviewed; the word “seasonal” alone does not determine whether a person can be excluded.
For comparison, a uniform 12% allocation would still give the owner $30,000 but would provide $28,800 to employees, for $58,800 total. The proposed new comparability funding difference is $19,200 before fees, if testing supports the shown allocation.
What could change the result?
Rehires, changing hours and year-end compensation corrections are especially relevant to a seasonal census. Include employment history, not just the payroll roster on the day you export the file. If the owner is self-employed, use the confirmed earned-income calculation.
Ages and rates in these tables illustrate the design conversation; they do not certify a passing allocation. Actual testing uses individual data, the plan’s provisions and applicable assumptions. Contributions already funded must be reconciled before any remaining amount is instructed.
What to ask your provider
Ask the provider to show the gateway calculation, explain each eligibility exclusion, and compare the same $30,000 owner target under both formulas.
Bring the complete census and current plan documents. For the basic comparison, read new comparability versus pro rata; for the minimum-contribution calculation, see the gateway guide.
Explore the next step
Try the free scenario calculator with hypothetical inputs, or compare more allocation examples. The methodology guide explains what the calculator does and does not test.
Sources & further reading
- Treasury Regulation §1.401(a)(4)-8: cross-testing and the gateway
- Treasury Regulation §1.401(a)(4)-2: contributions and rate groups
- IRS Notice 2025-67: 2026 retirement plan limits
- Internal Revenue Code §414: related employers and special rules
- IRS: retirement plans for self-employed people
Educational content updated September 27, 2026. Examples are fictional; they illustrate funding choices and do not constitute final testing or plan-specific advice.