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I'm looking for a little confirmation on what I hope are easy questions - with a lot of set-up. A control group has 9 different 401(k) plans. A few of the plans fail the ratio % test so we are going to aggregate the plans into 3 separate groups: Group 1: Plans 1, 2, 3, and 4 are not safe harbor and all have identical provisions. Group 2: Plans 5, 6, and 7 are not safe harbor and all have identical provisions (but different match than group 1). Group 3: Plans 8 and 9 are safe harbor match with identical provisions except Plan 9 also has a fixed 2% non-elective contribution. Groups 1 and 2 each pass the ratio % test for 401(k), 401(m), and 401(a) as well as ADP and ACP so we are in the clear. Group 3 passes the ratio % test for 401(k) and 401(m), but not 401(a). The only option for Group 3 is the average benefits test and it passes - if our system is running it properly. While I know the basics, I don't have a ton of experience dealing with the ABT and I'm always leery of results that I can't double-check with confidence. I know I should trust the software, but I trust the opinions of many of those who reply to this message board a little more. In the average benefits test the HCE and NHCE in Group 3 are having the EAR's calculated while all HCE and NHCE from Groups 1 and 2 are shown with a 0.00 EAR. The average EAR for all HCE is .72%. The average EAR for all NHCE is .65% so definitely more than 70% of the HCE EAR. Non-discriminatory classification seems fine - excluded employees are only those employees from companies 1-7 and the ratio % test for 401(a) was 52%. 1. With this information does it sound like our system is running this properly and all three groups pass coverage - or is this not enough information to hazard a guess? 2. I think we've aggregated the most-logical way possible but am I missing any potential problems with aggregating these 9 plans into 3 separate groups? 3. Each of these plans uses different recordkeepers, have different investment lineups, and very different fee structures. Is this a potential BRF problem?

Imagine a group of commonly controlled business organizations. All have a § 401(k) plan. None is a safe-harbor plan. The group has no troubles with coverage, ADP, or ACP tests. Some plans allow hardship distributions; some don’t. Imagine that resulted in § 401(a)(4) discrimination in favor of highly-compensated employees. For a year that ended, what may the employers do to cleanse the discrimination defect? If it can’t be done by self-correction, what would the IRS ask for?

Good afternoon everyone! I'm hoping one of the bright minds on here can shine some light on the following topic and proposed solution: Company A has a 401k plan with it's assets in participant directed accounts with a recordkeeper. Company B became part of an affiliated service group with Company A however previously participated in a MEP. They ceased participation in the MEP and want to move their assets in that plan to Merrill Lynch. To do this there are a few options: 1. Sponsor their own plan with the assets in a trustee directed brokerage account (pooled account with both HCE and non-HCE assets) with Merrill Lynch and transfer the assets from the MEP into it. Company A is much larger than Company B and since BRF testing would be needed due to different investment options, by using a trustee directed brokerage account, BRF testing on the benefit of having participant directed accounts would pass. 2. Sponsor their own plan and transfer the assets from the MEP into it, terminate it and rollover their assets into IRAs at Merrill Lynch and then wait a year to participate in Company A's plan. 3. Transfer the MEP assets into a trustee directed brokerage account with Merrill Lynch that is considered part of Company A's plan. Question 1: Is option 3 permissible? I have never seen a plan that has both participant directed accounts and a trustee directed brokerage account. Company B would be the only one with assets in the brokerage account but both Company A and B will have participant directed accounts under Company A's plan Question 2: Would the BRF testing be done again only on the right to have participant directed accounts or is there a concern that only Company B has the right to have assets in a trustee directed brokerage account?