Coverage Testing and Cross Tested Plan

[Guest Pension123]

I am reviewing a plan document which has the "fail safe" provision so that the Ratio Percentage Test must be passed for coverage and you do not have the option of passing coverage by using the Average Benefits Test. The plan as a whole will pass coverage under the Ratio Percentage Test.

If the plan is cross tested, does each rate group also have to satisfy the ratio percentage test?

Any help or advise on this would be great.

[austin3515]

rate group testing is 401(a)(4), and coverage is coverage. Fail-safe doesn't apply to 401(a)(4). Anyone getting a contriubtion is benefitting under coverage, and under the ratio percentage test it doesn't matter how much they get.

So I say the answer is you can use the avg benefits test to pass your rate groups.