401(k) Plans and Rule of Parity (Posted July 8, 2002) Technical Tip 76: The following question and answer were from the IRS Q&A Session at the 2000 ASPPA Annual Conference: The IRS has indicated that the rule of parity does not apply to 401(k) plans. Is this true even with respect to participants who have never made elective deferrals, but who have a profit sharing account under a 401(k) plan? Response: No. In such a case, the rule of parity may be used. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.