Controlled Group Member Fails Coverage

[Randy Watson]

Assume that you have a controlled group that includes Company A (has a safe harbor match) and Company B (has a non-safe harbor with a modest match). Historically, Company B has passed 410(b) so it's plan can be tested separately. But what happens if Company B discovers in December that they no longer pass 410(b)? It's too late to make Company B's plan a safe harbor plan. Do you simply bump everyone's match up to the safe harbor level with 100% vesting? What about those who chose to limit their deferrals in Company B's plan to maximize the modest match? What a mess!

[JanetM]

Wondering how this happened, since you can treat as benefiting anyone who is eligible even if they don't defer and receive match.

[Guest Stuartt]

Check the plan document for a chery picking provision. Most plans have language on what to do to correct a 410(b) problem.