Separately testing otherwise excludables

[AndyH]

We're cross testing a profit sharing plan and it fails badly. Plan has liberal eligibility and some of those "otherwise excludables" are HCEs, so we want to try separately testing otherwise excludables.

Rate group testing for the non-excludables (I'll call them "statutory participants") seems straight forward enough. Ignore the excludables as if they don't exist. Right?

Is rate group testing needed for the otherwise excludables who are benefitting? I assume so. How are the statutory participants treated? Is the concentration percentage calculated by ignoring them? Are they in the rate groups as non-benefitting, non-excludables?

If all rate groups are not at 70%, and we go to average benefits, are both groups lumped together? I think not; I assume you ignore the excludables when testing the statutory participants, but is the reverse also true, i.e. ignore the statutory eligibles when testing the otherwise excludables?

Lots of questions, I know. I did a search and couldn't find anything that addressed these specifics. The ERISA Outline Book comments seemed vague to me. Help would be appreciated!