Coverage- DC/DB

[Guest Napili]

An employer sponsors a DC plan and a DB plan. The DB plan covers one group of employees. The DC plan covers a different group. What are the coverage requirements in such a case? In other words, what are the coverage rules when an employer sponsors both a DB and a DC plan, each of which covers different employees.

What about Top-Heavy contributions.

[Tom Poje]

you have more than just coverage to worry about.

1. minimum participation - DB plan must cover at least 40% of eligible employees (or a total of 50 employees)

2. when testing for coverage, anyone who meets the eligibility requirements but receives nothing because they are in another plan is treated as includable and not benefiting. (Unless you aggregate the plans for testing coverage.)

3. you will have to do amounts testing. 401(a)(4). again this test will depend on whether or not you aggregate for testing.

generally a plan is required to indicate which plan will provide top heavy. I suppose it is possible you could end up with key employees in one plan only, then that plan only would have to provide top heavy...ugh, you have a lot to look out for in this case.

proceed with caution!

[AndyH]

How are the groups defined? Is one of them exclusively collectively bargained people? If so, a lot of your problems go away.