Multiple Employer Plan Testing

[DTH]

I have an unusual scenario and would like run this by for your expertise.

Plan A allowed for deferral and a match. The plan was frozen in 2002. In 2003 the employer adopted a multiple employer plan and participants began to contribute to the multiple employer plan. The assets from Plan A were merged into the multiple employer plan.

Plan A and the new multiple employer plan uses prior year testing (ugh). The employer does not want to switch to current year testing.

Is Plan A considered a successor plan for testing purposes? If yes, then the ADR and ACR would be 0%, which means the HCEs can only have 2% deferrals and 2% match. If Plan A is not considered a successor plan, I assume the adoption of the multiple employer plan is the “first plan year” and the ADP/ACP for NHCEs for the prior year is 3%.

Thanks!

[WDIK]

Is Plan A considered a successor plan for testing purposes? If yes, then the ADR and ACR would be 0%, which means the HCEs can only have 2% deferrals and 2% match.

Isn't it 0% for the HCEs?

[alanm]

The multiple employer plan is a successor plan to Plan A. However, the worksite employer can change to current year testing with an amendment to the adoption to the mulitple employer plan without affecting the other adopting employers.