Permitted disparity
Certified Financial Planner glossary · Certified Financial Planner
Definition
The integration of a qualified plan formula with Social Security, permitting higher contribution or benefit rates above a wage threshold.
Permitted disparity in plain English
A business owner wants the qualified plan to tilt contributions toward higher earners once Social Security already covers a base of wages. Permitted disparity is the integration of a qualified plan formula with Social Security, allowing higher contribution or benefit rates above a wage threshold within IRS limits. It is a nondiscrimination-aware integration design, not a blank check to favor HCEs however you like. Integrating plan rates with the Social Security wage base is permitted disparity by its technical name.
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