Participating company gets no discretionary match - employees part of ACP test?

[Harwood]

401(k) plan with a discretionary match. Plan sponsor is a controlled group with two companies participating. In 2003, company 1 received a discretionary matching contribution while company 2 did not. [Plan passes 410(b) coverage for the match even with company 2 employees not benefiting].

Question: Should the employees of company 2 be a part of the ACP test if they were otherwise eligible to participate? The adoption agreement does not exclude them from participation in any component of the plan, therefore, the decision not to provide a matching contribution was strictly a managerial one.

[Blinky the 3-eyed Fish]

First, those in the ACP test are those participants that are eligibile for the contribution. Thus, if you have a division that is not eligible for the match, then those in that divsion would not be in the test.

But you have an entirely different situation here. It sounds as if you have a complete failure to follow the plan document. Your last sentence says it all.