Form 5500: Line 10, Schedule T

[Guest LVanSteeter]

I have been told (third hand) that testing for Schedule T only needs to be done every third year.

Anyone have any thoughts or documentation?

[E as in ERISA]

Form 5500, Part II, Line 10(a)(2) allows you to enter the year you performed the testing.

[Guest LVanSteeter]

Yes, however is actually performing the test and filing a Schedule T every three years okay? I can't locate any confirmation of this.

[E as in ERISA]

See the discussion regarding "Substantiation Guidelines" in the instructions for Sch T. They cite Revenue Procedure 93-42, which contains guidelines for "(1) the quality of data used in

substantiating compliance with the coverage and

nondiscrimination rules, (2) the timing of coverage and

nondiscrimination testing, (3) the testing cycle of a plan, and (4)

the qualified separate lines of business (QSLOB) rules." If I recall correctly, the three year rule is in that Rev. Proc.

[jaemmons]

As long as the plan's demographics do not change, I believe you may be able to exercise the "3-year rule" contained in Rev Proc 93-42. Keep in mind that the data used to demonstrate compliance with 410(B) MUST be a true representation of the employer's workforce. Therefore, if HCE's change or the number of eligible and benefiting NHCE's/HCE's change, I would say you cannot use the 3-year rule.

[Kristina]

For a smaller plan, it is probably easier to do the Sch T and the 410(B) testing than to go thru the steps for the substantiation.