ABT for 410(b), Crtst for 401(a)4)

[Guest RSNOW]

Q: Employer has a DB and DC plan and we would like to test the plans using the ABT for 410(b) and utilize the special rule to separately test plans of the "same type" for the ABR purposes [1.410(b)-5(e)(3)].

I just want to make sure if I do this I'm not precluded from using cross-testing under the DC plan for 401(a)(4) purposes (DB is safe-harbor), since I read under above reg you can't use cross-testing with this special rule. I'm hoping that means just not for calc'ing the 410(b) ABP, and not that we're precluded from using cross-testing for 401(a)(4) purposes. FWIW, I can pass 401(a)(4) cross-testing for each rate group on a ratio/percent basis (without needing to utilize the ABT), though this may not be relevant.

Do anyone think the 410(b) "special rule" precludes me from using cross-testing for 401(a)(4) ? Also I assume I don't have DB/DC combo plan subject to higher gateway threshold since I'm not aggregating for testing, right ?

[Tom Poje]

1.410(b)-7(e) says for the avg ben % test you aggregate all plans that COULD have been permissively aggregated. Thus all paln are normally aggregated for this test, and this test alone.

Therefore, if you can pass the nondiscrim classification test unaggregated, then you do not not have a DB/DC combo, and thus no DB/DC combo gateway applies since that only applies to aggregated plans.

Thus, I think you are ok even if you test the Avg Ben % test on an unaggregated basis as well. I think that rule only applies in regards to that particular test.

I suppose an easier question would be, does the plan pass avg ben % test if you combine the plans? Remember, combining them for this test does not necessarily mean you are aggregating the plans for other testing purposes.