Cross testing HCEs with no allocation

[pmacduff]

Using Relius software...cross-tested 401(k) plan with approximately 17 Doctors who are a mix of key/HCE. Some of the Doctors who are key & HCE take compensation but per the Plan Document waive ANY allocation and they do not defer. Can't I include them in my non-discrimination tests with a "0' EBAR? The Relius software is not including them. Any input is appreciated.

[AndyH]

I can't help you with the Relius part, but yes, it sounds like you are correct that they should be 0%s.

[Tom Poje]

Guess it depends on which test you are referring to.

(Ooops. never end sentence in a preposition)

ADP test I would expect them to be excluded

other nondiscrim test I would expect them included. (Though if they waived out and you never gave them 1000 hours as a result then I suppose it is possible the system thinks they are ineligible.)

[Blinky the 3-eyed Fish]

Tom, why would they be excluded from the ADP test? They received comp but didn't defer, so that seems like a 0% to me.

[Tom Poje]

I assumed (possibly incorrectly) that the statement the

ee waived out meant person made one time election not to participate.

under 1.401(k)-1(g)(4)(ii)

says one time election, ee is not treated as an eligible employee for the ADP test, and is therefore excluded.

however, it must be recalled that such a person is included and not benefitting for coverage purposes.

and no such rule exists for excluding the employee from the avg ben % test