Prior Year ADP Testing for New Plan

[Guest kgsingletary]

Company A adopts a company sponsored 401(k) plan effective 1/1/02.

Then, on or about 7/16/02 Company A joins a PEO and adopts the PEO's retirement plan at the same time discontinuing contributions to the CO sponsored plan adopted on 1/1/02.

The PEO plan is tested on a prior year basis for ADP/ACP.

IRS Notice 98-1 states successor plans are not treated as new plans for purposes of prior year ADP/ACP testing deemed 3% rule.

What percentage do I use, in testing the client under the PEO plan, for the prior year?

Any ideas or suggestions of further research sites are appreciated.