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Excluded by Job Class


Becky Schwing

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Cross tested profit sharing plan with everyone in their own group.  Plan excludes a group of employees by job classification - some who would otherwise be eligible other than the job class exclusion.  

When doing coverage testing - plan passes Ratio Percentage test with these excluded employees included in the counts as not benefitting.

When doing non-discrimination testing on the profit sharing allocation (HCE's getting a 20% contribution and NHCE's getting 5% - has no last day or 1000 hour) do I have to include the excluded employees in the calculations at a 0% benefit rate?  

 

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You do not have to include them for the gateway test.

You do have to include them for the rate group test.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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