Controlled Group with Two Plans

[Guest PES]

I have a controlled group where each Corporation wants to sponsor its own plan. Company A wants to provide a match contribution, and Company B does not. The remainder of the plan provisions are the same.

The plans will pass ADP/ACP when tested as one group.

The group also passes 410(B) ratio percentage test for the match contribution with the participants from Company B not benefitting.

Here is my question:

Does the testing group need to pass the general test, 401(a)(4), since there are effectively different benefit accrual rates within the testing group because Company B participants are not eligible to receive a match contribution? Or, does the fact that the 410(B) ratio percentage test pass preclude the need for the 401(a)(4) test?

Thank you for any assistance.

(Note: the testing group also passes the average benefits percentage test)

[Mike Preston]

The provision of a match is a "benefit, right or feature" which is tested under 1.401(a)(4)-4. Based on what you have described, you have an easy pass of the tests. The test under -4 is essentially the same as under 410(B).

You do not need to test different levels of contribution in any way.

I would be a bit concerned about using any sort of ADP/ACP shifting to pass the ADP or ACP tests, but then again, you probably aren't doing that. And even if you are, I'm not saying it can't be done, just that I haven't looked it up.