Allocations
(i) Allocations. Allocations means the amount determined by multiplying the employee's plan year compensation by the employee's unadjusted allocation rate. (ii) Permitted disparity rate(A) General rule. Permitted disparity rate means the rate in effect as of the beginning of the plan year under section 401(l)(2)(A)(ii) (e.g., 5.7 percent for plan years beginning in 1990). (B) Cumulative permitted disparity limit. Notwithstanding paragraph (b)(4)(ii)(A) of this section, the permitted disparity rate is zero for an employee who has benefited under a defined benefit plan taken into account under 1.401(l)-5(a)(3) for a plan year that begins on or after one year from the first day of the first plan year to which these regulations apply, as set forth in 1.401(a)(4)-13 (a) and (b), if imputing permitted disparity would result in a cumulative disparity fraction for the employee, as defined in 1.401(l)-5(c)(2), that exceeds 35. See 1.401(l)-5(c)(1) for special rules for determining whether an employee has benefited under a defined benefit plan for this purpose. (iii) Taxable wage base. Taxable wage base means the taxable wage base, as defined in 1.401(l)-1(c)(32), in effect as of the beginning of the plan year. (iv) Unadjusted allocation rate. Unadjusted allocation rate means the employee's allocation rate determined under 1.401(a)(4)-2(c)(2)(i) for the plan year (expressed as a percentage of plan year compensation), without imputing permitted disparity under this section. (5) Example. The following example illustrates the rules in this paragraph (b):