401(a)(4) Testing

[Guest LCOLLINS]

In what instances would you have to run 401(a)(4) testing on a Safe Harbor 401(k) Integrated PSP?

[ERISAnut]

None that I could think of. The integrated allocation satisfies the uniform allocation formula. The Safe Harbor should pass 410(b). If there is ever such a time, the attorney (or consultant) who designed the plan should be excommunicated from the pension industry.

[Guest LCOLLINS]

We've been already told by sources that when someone is receiving only the 3% SH/THM because they fall below the required hours for PS allocation, you are creating "classes" which should then be tested for non-discrimination.

[Archimage]

If you can only pass coverage testing by treating those that get the top heavy minimum only as benefitting, then you would have to run 401(a)(4) testing.

[wsp]

We've been already told by sources that when someone is receiving only the 3% SH/THM because they fall below the required hours for PS allocation, you are creating "classes" which should then be tested for non-discrimination.

Not true...I recently made the same assumption.

Do not confuse the 416 requirements with 401(a)(4).

The Top Heavy rules are under 416 while the non-discrimination rules are in 401(a)(4).

You seem to be using top-heavy in the wrong context.

Top Heavy contribution has nothing to do with the integrated profit sharing contribution (which E-Nut is right in that you don't test 401(a)(4)), although that contribution can be used to satisfy the top heavy contribution.

If it were a New Comp plan and required testing you would test after the contribution is allocated and before the top heavy allocation. You don't go back and retest 401(a)(4) again. Either way the TH allocation doesn't create a class.

[Tom Poje]

you are correct in cases in which an ee is safe harbor eligible (all participants) vs profit sharing (which could be restricted to hours /last day provision.

hopefully you would be able to pass on an allocation basis otherwise you might have to provide the gateway minimum. I would expect the only time you could fail would be if more than 30% of the NHCEs failed hours/last day.

[wsp]

If you can only pass coverage testing by including those that get the top heavy minimum only as benefitting, then you would have to run 401(a)(4) testing.

True, wish I would have added that caveat to my prior post, but OP said that "simply by allocating the contribution you've created a class" so I didn't go the coverage testing route.

[AndyH]

There are many more reasons why a(4) testing might be needed. For example, the integration might not satisfy the safe harbor rules. The comp may not be safe harbor comp. The plan might not have uniform benefits, rights and features. Ther might be different match levels.

The question is overly simplistic.

[Mike Preston]

How about if the plan is part of a permissively aggregated group with a non-safe harbor plan? Think DB/DC combo here.