Availability of Different Rates of Match

[Guest merlin]

I have a plan that covers three groups of employees. There is a fourth group that is excluded from all plan participation. Each of the first two groups has its own specific match formula written into the plan, and each passes the availabilty test. The plan is totally silent wrt the third group. How should they be considered for purposes of 410b? They are eligible, but for nothing. It seems rather flimsy to treat them as benefiting for coverage puposes.

This is a critical issue because the coverage ratio is 55% if they are treated as benfiting, so I have the abt available. If they're treated as not benefiting the ratio drops to 14%

[Mike Preston]

Merlin, can you clarify what the third group is getting? Are they eligible to defer but are not eligible for a match?

[Guest merlin]

Mike,

The plan specifies the match formulas for the first 2 groups, but makes no mention of the 3rd group. However (new information), the plan also permits all participants to makeafter-tax employee contributions, which are also part of 401m. Does the availability of the after-tax $ save the coverage test?

[MWeddell]

It sounds like the coverage test numbers for the 401(m) test will be identical to the 401(k) test. Only 3 of the 4 groups are eligible, so you'll need to run the ratio percentage and see what you get.

Then, you'll have a BRF testing issue for each rate of match. If the third group has no match available to them regardless of what those employees elect to contribute, then it'll count as not benefitting when you're determining whether each match rate passes current availability.

[Guest merlin]

The plan has 1607 non-excludables of which 1306 are NHCs. The conc. ratio is 81%, which gives a safe harbor % of 34.25%. The first 2 groups have ratios of 45% and 82% respectively. The 3rd goup includes 257 HCE,none of whom are benefiting under the match. So all groups pass the availability test, right?

[MWeddell]

What are the counts for the whole controlled group, including group 4?

[Guest merlin]

The coverage ratios for the k and m portions of the plan are identical, as you said: (1306/2387)/(301/303)=55.08%. The ABT is passed.

[MWeddell]

Yes, I guess that last question was unnecessary, now that I've got a better feel for the data you've posted. Previously, it wasn't obvious to me that the 45% and 82% were ratio percentages using the whole controlled group.

Yes, I would say that all match rates pass current availability based on the data you've listed. Effective availability is unlikely to be a problem based on what you've told us.