DB/DC Combo first year

[John Feldt ERPA CPC QPA]

My question is concerning the combination of the DB ebars with the DC ebars for the general test when the DC plan provides the combo plan gateway of 7.5% of pay, but where the DC plan is only based on 7 months of pay in the first year. The client is adopting 2 new plans this year, they've never had qualified plans before and their fiscal year is a calendar year.

If the DC plan is a short plan year, say June 1, 2006 to 12/31/2006, but the DB plan is the full 2006 year, when we convert the DC contributions and divide by DC comp for the DC ebar, are we OK to use the short year DC compensation to achieve the DC ebar? The DB ebars will be based on full 2006 compensation - so when we add the two sets of ebars together, I'm concerned that we are adding apples to oranges to arrive at an invalid result, or is this legitimate thing to do?

PS, yes I know we could lower the 7.5% a bit because of the DB accruals, but we are just concerned over the short plan year DC here.

I did not find guidance, but I could have looked harder I suppose.

[Blinky the 3-eyed Fish]

You are permissively aggregating the plans yet they have different plan years. This is a violation of 1.410(b)-7(d)(5).

[John Feldt ERPA CPC QPA]

Yup. OK - thanks!

[AndyH]

This can arise under the Average Benefits Test even for different years and I believe the answer would be to use the sum of two separately calculated EBARS, as the non fish poster was inclined to do before the fish correctly harpooned him (or her).