Permissive Aggregation of ER Match

[Guest Lauren K]

I have 2 companies that are now owned by the same group of people. I only administer Company A. Company B has a match provision and Company A does not. Company B failed it's 2005 ADP test and neglected to make the refunds. The TPA for company B would like to aggregate the plans for 401(k)/(m) testing for 2005 because together, A & B pass the tests (both (k) and (m) test) and no refunds would have been necessary.

My question is, can these plans be aggregated when Company A does not have a match feature?

Thanks.

[austin3515]

Yes for ADP (because you can aggregate two 401k's in the same controlled controlled group.).

For ACP though, it's a no go (only employees eligible for the Plan can be included in the tes), but you did not indicate that the ACP was failed anyway.

I think a clarifying point is that you can aggregate the "401k plans" without regard to your ability to aggregate your "match plans." For coverage/nondiscrimination, they're treated as completely different plans.

[rlb64]

Were they related employers during 2005?

How can it possibly pass ACP if you're bringing in a whole bunch of 0's from the nonmatch plan into the ACP test?

[J Simmons]

Could still pass ACP with those zeroes. Some of those zeroes brought in might, for example, be HCE zeroes.

[austin3515]

I missed the word "now" in the OP - rlb64 asked a good question - were they related in 2005? You could aggregate in the year of acquisition, but not they year before acquisition.

[Guest Lauren K]

Thank you for all of the input.

To answer the follow up questions... The acquision was in 2005, so they were related in 2005.. and Yes, it passed the test because there were a lot of HCE 0's in the test!

[austin3515]

Then my original response remains unchanged.