Treas.Reg. 1.410(b)-5(d)(3)(ii)

[Guest Paula G.]

Facts: Plan A's year ends 1/31/06; Plan B's year ends 12/31/06

Both plans must be tested for coverage on a controlled-group basis for the plan years ending in 2006. Plan A is maintained by one member of the controlled group and Plan B is maintained by another member of the controlled group. Both plans are 401(k) plans.

Question: Plan A fails the ratio test on a controlled group basis for the year ended 1/31/06. The TPA wants to perform the average benefits test. What data should the TPA use for the ABR testing group with respect to Plan B? Can it use the 12/31/05 benefit percentages, given the fact that the plans's year has not yet ended for 2006?

[Leopurrd]

I think you have to use the plan years that end in the same calendar year; so you would use 12/31/06 for Plan B.

However, with them being so far apart, I'm not sure how this actually works! I only remember this from some DC-3 reading.

Sorry I can't be of more help. Hopefully someone else from the board will post!

Vicki

[Tom Poje]

your memory is correct - you calculate the percentages using the plan years ending in the same calendar year - this is for the avg ben % test only.

you can not permissively aggregate plans that do not have the same plan year for other purposes.