Method for Allocating Excess Assets in DB Plan

[Guest YATPA]

Terminating DB plan with excess assets. Sponsor wants to allocate the excess based on a % of comp times YOS, however, they want 4 different groups with each group getting a different % of comp. Since this is a non-safe harbor formula, I'm using the general test to test allocation of excess. Sponsor also has a 401(k)/PS plan, so I know that if I use the ABT, I'll have to include the deferrals and PS allocations in my ABPT. Sponsor doesn't want to wait until the end of the year when these amounts are known, so I'm trying to pass a4 using the ratio test. I have 1 HCE rate group and have determined I'll need at least 13 NHCEs in his group to pass.

I'd just like some assurance I'm on the right track with this, make sure I'm not overlooking something, and get any ideas anyone has for passing the test.

Thanks!

[AndyH]

You don't need to include the DC stuff in the DB general test, even the ABPT, unless you are cross testing. Bet that'll make your day.

1.410(b)-5(e)3

[Guest YATPA]

That does make my day! Read the reg but just so I'm clear, I can use the ABPT to pass as long as I test on a "benefits" basis and not a "contributions" basis?

[AndyH]

Yes.