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Showing results for tags 'reasonable business class'.
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I know this has been discussed a few times, but anyway: Suppose a profit sharing only plan, not top heavy, has the profit sharing allocations with each participant in their own rate class. Assume 6 NHCEs and 1 HCE - all eligible for the plan. Also assume the plan has a last day requirement in order to receive an allocation. 2 NHCEs quit - both worked over 1000 hours. The document does not show an election to apply any "automatic fix" provisions for a ratio percent coverage test failure. Running an average benefits percentage test for coverage essentially requires a classification that is reasonable and is established under objective business criteria. Would this plan be allowed to run the average benefits percentage test for coverage purposes? Or, must the plan resort to a 1.401(a)(4)-11(g) amendment to make the plan pass the ratio percent test for coverage? Would the answer be any different if the plan had no allocation condition (no last day requirement)?