ABT with 2 year wait

[jaemmons]

Plan is cross-tested.

401k eligibility is immediate entry

Profit Sharing has a 2 year wait and allocation are based on compensation from date of entry.

When running the average benefits testing with permissive disaggregation for statutory exclusions, shouldn't the ABT use eligible comp for 401k purposes, since this is the lowest age/service condition? For eligible participants who receive a profit sharing contribution, their AB% is being determined on their partial compensation (which was used to calculate EBARs).

Thoughts/suggestions?

[Tom Poje]

I would certainly agree you shouldn't use just comp from date of entry.

I would hold that you should calculate an EBAR for the 401k based on total comp and an EBAR for the profit sharing based on comp from date of entry, and then aggrgate the two numbers.

e.g. testing on an allocation basis

if ee deferred 5% and nothing else his EBAR would have been 5%

if ee received a 4% ps contribution from date of entry, his EBAR would have been 4%

it seems reasonable to conclude if you had two separate plans the EBAR would be 9% if aggregated

[jaemmons]

Thanks Tom,

That is a wonderful idea, but unfortunately, the software we use cannot accommodate your suggestion, which is why we have a problem with the ABT in this cross-tested plan.

[Tom Poje]

I understand. you are trapped. you need the ps comp to do rate group testing but you need a combo value to do Avg ben % test

I haven't played with the software I use enough to know, but there are 2 fields

one says 414s and the other 414s avg ben % test - I wondered why there were two fields, and maybe one is used for rate group and the other for the avg ben % test. have to try an experiment. If that is the case, then at least the system can be 'faked' out to produce the desired results.

years ago I had to come up with a scheme to fake the system out when family aggregation was involved, I suppose the same would be possible if you have similar software. figure out what the combo ebar should be, plus a fake comp to prodcue the desired results. a little extra work, but still possible.

good luck!