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Non-electing Church plans are exempt from discrimination testing....preERISA rules generally apply. IRS Notice 2001-46 essentially is silent about K & M testing on 401(k) plans adopted by churches. I don't believe they are subject to K&M testing. Is there any IRS pronoucement that settles this issue? Since 403(b) church plans are clearly and uniquivocably exempt from any kind of contribution testing other than Deferral and 415 limits, it stands to reason that church plan 401k's would be treated similarly. Does anyone have any opinion on this. -
I am not sure how 401(k) plans works, so hoping for any guidance. Apologies if question is basic. Several companies are in the same brother sister controlled group. None has ever had a 401(k) plan. One of the companies wants to set up a 401(k) plan that would cover just its employees. Can that company do that or must the plan allow participation by employees of other brother-sister companies? Also, assuming that the company can set up a 401(k) plan to cover just its employees, would discrimination testing be done on just that company's employees or must it include employees from all the other brother-sister companies? Thanks.
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Plan sponsor has active defined benefit and profit sharing plan. At present time both plans are safe harbor (same accrual rate/allocation for all participants) Starting 2016 the DB plan will amend the formula to 5% X avg comp X years of service for the HCEs and 0.5% X avg comp X years of service for NHCE. All benefits accrued tio the date of change will be preserved (frozen), etc. Using the fresh start with wear away, some of the participants will not accrue any benefits until the benefits accrued under the new formula will equal the frozen accrued benefits. The DB and PSP will be aggregated for testing purposes. The profit sharing allocation for NHCEs will be whatever is needed to pass the aggregate discrimination tests. Question: In the discrimination tests; should the participants that do not accrue benefits due to the wear away be considered as benefiting (0.5%) or non-benefiting due to the fact that practically they do not accrue a benefit during the year? We are using current year accrual method for discrimination testing. Help is greatly appreciated.
