Rate banding?

[jkharvey]

I need to confirm my interpretation of this. The provision in the regulations that allows a Plan to use rate banding (Quantech's term) to test for nondiscrimination does not apply in cross-testing?

Am I understanding it correctly that the use of rate bands (grouping of allocation rates) only applies when testing the allocations and not the allocations as converted to benefits.

I'm not sure if I have made sense here.

For Quantech users, the scenario is like this. Cross tested plan. When running the nondiscrimmination test select the following options: Accrual (versus allocation) and rate banding.

Thanks.

[Mike Preston]

I'm not aware of any prohibition on the use of rate banding in cross-tested plans that doesn't exist in non-cross-tested plans. I'm sure somebody else can post the citation if you need it.

However, the use of banding requires that the impact of the banding not be applicable significantly to decreasing HCE's or increasing NHCE's. Hence, it is rarely useful in smaller plans.

Somebody else will need to address your Quantech concerns.

[Tom Poje]

I agree with Mike, no prohibition against banding when cross testing.

Relius (Quantech) will perform it, but as Mike pointed out there are limitations regarding favoring HCEs.

Unless you are at 7.0 update or higher, then I would never use rate banding because the system sets the HCE at the highest level possible. that is a no-no.

At 7.0 you are allowed to set your bands, but you better know what you are doing