401(a)(26)

[Guest lerieleech]

I have seen various practitioners perform this test while looking at the full year, rather than at one date. For example, for a calendar year plan, if one prior participant terminates on 7/1 with 1000 hours, and another is hired and enters on 9/1 and is still active on 12/31, both would count in the denominator of the test, and possibly in the numerator, depending on other facts.

However, the reg (specifically 1.401(a)(26)-7) doesn't seem to read this way. It says that the plan passes 401(a)(26) if it passes the test on every day of the plan year, but alternatively, it passes 401(a)(26) if it passes on any single day, but only if that day is reanonably representative. This doesn't seem to allow for a method that looks at the plan year as a whole, but as I said, I have seen various practitioners do it that way.

Can anyone shed some light on this?