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Posted

I have a client who has two separate divisions. Each division has its own plan. Both are PSPs with 401(k) features. Elig is 21/1 with semi-annual entry for both. The plan for division A is providing a PS cont. The plan for division B is not. I have begun to test coverage and I am currently failing the ratio test for division A. I am moving on to the ABT. I am going to calc the ABPT, but I have a question. The plan for div A defines comp as while a participant. The plan for div B defines comp as the whole year. When I calc the ABPT, I assume that I use partial year comp for plan A (as defined by div A's doc) and whole year for B (as defined by div B's doc), correct?

If so, is there any way I can use partial year comp for B? (Presumably this will help my results.)

A hypothetical follow-up. If either of the plans were to define comp differently for each component of the plan, I would have my choice as to which to use for the ABPT, correct? Provided it meets 414(s). (I would think this is a no brainer. I would want to use the partial year for a better result.)

Thanks in advance.

Posted

The calculations of the ABT must use a compensation that satisfies 414(s). Absent a plan provision mandating compensation for this purpose, you can certainly use comp from entry for both divisions. It doesn't matter what the plan uses for allocations.

"What's in the big salad?"

"Big lettuce, big carrots, tomatoes like volleyballs."

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