Physician owners do not have to share the same savings goal. A suitable new comparability design can model different targets while accounting for the full practice workforce.
The business and its goal
A two-physician practice wants employer contributions of $45,000 for its senior owner and $30,000 for its second owner. The practice has six eligible staff members, each earning $50,000. Both owners are HCEs; the staff in this fictional case are NHCEs.
What the allocation could look like
| Participant | Age | Compensation | Rate | Employer dollars |
|---|---|---|---|---|
| Physician owner A | 60 | $300,000 | 15% | $45,000 |
| Physician owner B | 55 | $250,000 | 12% | $30,000 |
| Staff member 1 | 26 | $50,000 | 5% | $2,500 |
| Staff member 2 | 29 | $50,000 | 5% | $2,500 |
| Staff member 3 | 31 | $50,000 | 5% | $2,500 |
| Staff member 4 | 34 | $50,000 | 5% | $2,500 |
| Staff member 5 | 37 | $50,000 | 5% | $2,500 |
| Staff member 6 | 41 | $50,000 | 5% | $2,500 |
| Total | — | $850,000 | — | $90,000 |
The owners receive $75,000 combined, and staff receive $15,000 combined. Total employer funding is $90,000. Because the highest owner rate is 15%, the common standalone DC gateway starts at 5%. That does not establish that both owner rate groups pass.
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.
What a uniform formula would change
A uniform 15% contribution would give the owners $45,000 and $37,500, and staff $45,000, for $127,500 total. That is not the same owner objective: it also gives the second owner $7,500 more than requested. A clear proposal should show that difference instead of presenting the entire $37,500 funding gap as a like-for-like saving.
For this practice, the useful comparison is whether a tested allocation can meet each owner’s separate target within the $90,000 proposed budget. The answer may require changes to the illustrated staff amounts.
What could change the result?
Disclose management companies, other practices, leased employees and affiliated service relationships. If a cash balance plan is present or being considered, the actuary and DC provider must coordinate the combined design. These figures illustrate only standalone DC employer contributions.
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 list each owner’s target separately, identify the most restrictive rate group, and confirm the complete employer group before quoting employee costs.
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.