Guest dlm Posted June 28, 2001 Posted June 28, 2001 An employer wants to have a 401(k) Plan with 1 year of service requirement for entry on the 401(k) deferral piece. THey would also like to, in the same plan, have a new comparability formula profit sharing piece with 2-years of service for entry. For 401(a)(4) testing on the profit sharing allocation, do I need to include employees who met 1 year of service for deferrals, but not 2 years of service for the profit sharing piece??? What if I give the 401(k) eligible participants a safe harbor 3% contribution, then do i need to include them in the profit sharing 401(a)(4) testing? thanks!
lkpittman Posted June 28, 2001 Posted June 28, 2001 I think you can exclude the participants who are not yet eligible for the PS portion from the 401(a)(4) testing. However, in 2002, I think you will have to provide them with an allocation because they will be "in the plan" (participating in salary deferrals) or you would fail the minimum allocation gateway (just like you would have to provide them with a top heavy 3% minimum if the plan was top heavy). Likewise, I think you'll have to include them in the 401(a)(4) testing if they receive a 3% non-elective ADP safe harbor contribution. I am interested in any other comments you receive! LKP
Guest sdolce Posted June 29, 2001 Posted June 29, 2001 I posted a similar question on the Cross-tested Retirement Plans board on 5/25. The post was titled "Testing a 401(k) plan with multiple eligibility requirements." The responses were essentially the same as ikpittman's,maybe with more details. Have a look.
lkpittman Posted July 2, 2001 Posted July 2, 2001 Thanks--I'll have a look. Also--the new final regs are here. I haven't had a look yet, but they should shed some light on the matter.:confused: LKP
Guest Tom Geer Posted July 5, 2001 Posted July 5, 2001 Look at the third paragraph of part B of the explanation in the Preamble, whioch simply clarifies what was already true.. In a nutshell, the plan could exclude the <2 years people in applying the rate group portion of the cross testing. However, everybody in avery plan, and all their contributions under them, are counted in the ABP test.
Guest dlm Posted July 6, 2001 Posted July 6, 2001 But isnt the 410(a)(1) in the preamble pointing towards the minimum meaning -1 year of svc age 21?
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