For a practice with an older owner and younger staff, new comparability may reduce the employee funding needed for a particular owner target. The census—not the dental industry label—determines the result.
The business and its goal
Dr. Morgan, age 57, has $300,000 of eligible compensation and wants a $45,000 employer contribution. The practice has four eligible employees and already funds a 3% safe harbor nonelective contribution for everyone shown. The goal is to compare the total cost of reaching the owner target.
What the allocation could look like
| Participant | Age | Compensation | Rate | Employer dollars |
|---|---|---|---|---|
| Dr. Morgan (owner) | 57 | $300,000 | 15% | $45,000 |
| Hygienist | 30 | $60,000 | 5% | $3,000 |
| Assistant | 34 | $50,000 | 5% | $2,500 |
| Front desk | 38 | $40,000 | 5% | $2,000 |
| Office coordinator | 29 | $50,000 | 5% | $2,500 |
| Total | — | $500,000 | — | $55,000 |
The proposed allocation provides $45,000 for the owner and $10,000 for staff: $55,000 total. A uniform 15% allocation would provide the same owner dollars but $30,000 for staff, costing $75,000. The illustrated difference is $20,000 before fees and subject to testing.
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.
How much is still left to fund?
The 3% safe harbor contribution already supplies $9,000 for the owner and $6,000 for staff. If the proposed total allocation passes testing, additional funding would be $36,000 for the owner plus $4,000 for staff: $40,000. The $55,000 total includes that $15,000 already allocated.
For a hygienist earning $60,000, this means $1,800 of safe harbor plus $1,200 of additional profit sharing, for $3,000 total. The employee does not need to defer from pay to receive a nonelective contribution.
What could change the result?
An older hygienist, a newly admitted associate owner or a change in part-time eligibility can alter the result. An associate dentist’s HCE classification also needs review; “nonowner” does not necessarily mean NHCE. Confirm hours, eligibility and any other practices owned before finalizing the study.
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 for a same-owner-target comparison and a reconciliation of safe harbor already funded. If the provider needs more than the displayed 5% for staff, ask which testing constraint causes the increase.
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
- Treasury Regulation §1.401(k)-3: safe harbor requirements
Educational content updated September 27, 2026. Examples are fictional; they illustrate funding choices and do not constitute final testing or plan-specific advice.