coverage testing

[Guest SueM382]

If you have a SH that had immed entry for sh and deferral but you have a PS contribution that has a 1 year and 1000 , Do I still need to pass a 410 (b) on the ps?

Because right now I am giving out a SH and on the PS side I only have 4 out of 16 ee's eligible for the contribution. I always get confused on if I still ahve to pass the Coverage if I gave every one a 3% SH.

Thanks!

[Tom Poje]

the safe harbor is a type of nonelective contribution, so for purposes of coverage regarding the nonelective portion of the plan all benefit. end discussion.

however, when looking at the nonelective portion of the plan, you have some people receiving 3% and others receving more. this means you have to perform nondisrimination testing.

you did not say how many many HCEs vs NHCEs are getting the additional profit sharing.

for example, assuming 1 hce and 15 nhce you have 15/16 nhce concentration % = 93.75% or a midpoint of 22.25 %.

3 of 15 NHCE get the additional profit sharing which is 20%, so that would fail rate group testing.

if you cross test, and the HCE received more than 6% additional profit sharing, then the gateway minimum would also kick in.

of course the numbers I threw up are only an example based on limited facts provided, so its hard to tell what your situation holds.

[Guest SueM382]

Thanks Tom..I think I am going to run it thru relius and do a ABT.

I have 2/2 hce benefiting on the PS side I only have 3 out of 16 benef on the NHCE side. (that is using my eligiblitly of 1yr los and ldp. So I am only at 18.75 %. Don't I have to bring people in till I am at 70% or if I ran a ABT maybe less?

[Guest SueM382]

Ok, one more thing. Since my Sh and Def elig is only 6 months monthly Many of the people who got a SH contribution are not even eligible for the PS yet because that eligiblity is 1 ye and Quart entry. But I am still including them in my coverage for the PS side...yes??

Sue

[Tom Poje]

for testing purposes you can split the plan into - that is, test otherwise excludable separately. based on what you indicated, you will have to do this (unless you go the route of putting in a corrective amendment to give additional contributions to selective people.) hopefully testing otherwise excludables separately will solve the problem.

[Guest SueM382]

So i can use the "otherwise excludables" in my coverage?

[Tom Poje]

yes, though coverage is not the problem since all benefit. but if you use it for coverage you must use it for nondiscrim, and that is the one that may give problems.