401(a)(4) Testing Group

[Guest Golden401k]

I have a 401(k) cross-tested plan that has immediate eligibility for all division with respect to employee deferrals, however excludes certain divisions from any employer contributions.

The plan passes coverage testing using the ratio test. Working on my 401(a)(4) test. Do I exclude these excluded divisions from my 401(a)(4) test since I pass coverage? If I need to rely on the general test to pass each rate group, are they also excluded from the average benefits percentage test even though they are eligible for deferrals?

Thanks!

[AndyH]

For the rate group portion, people who are not in the plan but do not have a statutory exclusion are included as 0%.

For the ABPT portion, they are in the test and their deferrals are included. This will help.

So, to your question, they (other divisions) are excluded from neither test.

But if they were to have nonelective ER contributions like the plan you are testing, those would be ignored from the rate group test unless you were permissively aggregating (and met the necessary conditions to do so).

[Guest Golden401k]

I'm confused about the bottom statement regarding nonelective employer contributions (profit sharing). This is exactly the contribution I'm testing. Are you saying that I can exclude a division of employee's that are only eligible for deferrals from the rate group test? or are they counted as 0% in the rate group test.

Thanks!

[Tom Poje]

if you only have 1 plan, then they would be 0% which never helps.

based on Andy's comment (bottom statement) - it sounds like he was thinking

suppose there were 2 plans

plan 1 gave x%

plan 2 gave y% to the divsion (rather than 0)

in that case, the ees in the division in plan 2 would still be 0, unless you permissively agregate the 2 plans, and then you would count the y%. but I don't think that relates to your question. its getting near Christmas, Andy needs time off............??????

[AndyH]

Double bullseye. What Tom said. I was trying to reinforce the point with a different fact pattern.