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401(a)(4) testing using attained age or age nearest


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I don't recall much discussion on this.  We have always used age nearest for 401(a)(4) testing.  Any comments or thoughts on using either attained age or age nearest in 401(a)(4) testing?  And for DB/DC combo testing, does different definitions of "age" matter (for example, DB is age nearest month, DC is age nearest or attained age), since testing is usually not a plan document provision.

Thanks...

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From the C&NDT answer book:

Apparently either method is valid. It is the position of the IRS that a plan may use attained age (as of last birthday) or age nearest the testing date for purposes of the general test, as long as it is applied in a consistent manner from year to year. If nearest age is used, the equivalent benefit accrual rate (EBAR) for participants born in the first half of the plan year is reduced by one year's worth of interest when compared to using age last.

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Many thanks, CuseFan.  Where it says "consistent manner from year to year", do you think that means that a plan should stick to one or the other for all years?  Or that in any given year, it only has to be consistent for all participants in that year.  Also, can you tell me what C&NDT stands for?

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Coverage & Nondiscrimination Test.

I interpret consistency from year to year as all years in general but don't know if you must lock it in forever. If you changed methodology to B after using A for say 5 years and then continued with B for a number of years, that might be OK. I don't know how IRS would even monitor as I don't recall them ever asking for the NDT over multiple years.

Consistency among all participants and all aggregated plans is required regardless.

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