Nonuniform Employer Contributions

[Guest LLandau]

I need confirmation, please.

A holding company owns three separate companies (therefore these are all in the same controlled group of companies).

One company has its own 401(k) plan. This plan does not provide for any employer match. There are 130 NHCEs, and 10 HCEs.

The other two companies participate in a single multiple-employer 401(k) plan because these two companies are involved in the same type of business (separate and distinct from the third company). This plan provides for employer matches. There are 40 NHCEs, and 2 HCEs.

I do not anticipate any problem arising from the fact that the one company does not make any ER match when the ERs participating in the multiple employer plan do make ER matches.

Am I fooling myself?

[E as in ERISA]

On its face, it appears that each plan passes coverage independently. There are fairly equal percentages of both NHCE's and HCE's excluded from the match. Or to be more specific, it appears that the first plan benefits 76% of the nonexcludable NHCE's and 83% of the nonexcludable HCE's (a 91% ratio). And the second plan benefits 24% of the nonexcludable NHCE's and 17% of the nonexcludable HCE's (a 141% ratio). But make sure that you are looking at the plans' eligibility terms and correctly classifying all the employees as excludable vs. nonexcludable for coverage testing.