Excluded Employess & Cross Testing

[Guest Michele Ciz]

I have a plan that has a group of employees that are specifically excluded from the Plan. The plan is passing the 410(b) coverage tests with that specific group "Not Benefitting". Because the coverage tests are passed, can this specific group be carved out of the 401(a)(4) test?

[buckaroo]

The excluded group (who have met min age/service in doc.) must be included in the rate group calculations (Denominator), unless they meet the the definition of an exlcudable employee (i.e. have not satisified min age/service, select union ees, etc...)

[Guest Sieve]

I don't do cross-testing myself (nor do I do windows, for that matter), but doesn't 401(a)(4) testing only include those who are benefiting under the plan as described in 1.410(b) (assuming, of course, that 410(b) testing is passed, as in the OP)? See, e.g., the definition of "employee" in Treas. Reg. Section 1.401(a)(4)-12. Or am I way out in left field once again?

[Tom Poje]

close, you have the correct reg cite, but the wrong definition

look up 'non-excludable employee ' in Treas. Reg. Section 1.401(a)(4)-12.

also recall that the gateway minimum need only be provided to those who are benefiting, by implication you have others that are not benefiting in the test.

looks to me like Sieve is getting ready for another hockey season up in Detroit

[buckaroo]

Mr. Poje is correct. The way I think of it is that it folows the same rules as coverage when it comes to ideitfying employees in the coverage group.

[Tom Poje]

the one exception:

we are talking 'nondiscrim testing' and in particular as it applies to non-elective contributions.

the non-discrim testing for deferrals and match are the ADP and ACP tests. in those tests, a person must be actually 'eligible' to defer or receive a match. Therefore, if you had a last day provision, someone who quit would not be on the ACP test with a big fat ZERO. They simply wouldn't be on the ACP test. Yet, if the person worked over 500 hours, they would show up in coverage as includable and not benefiting.

[Tom Poje]

Sieve:

finally had the chance to look up the other reg cite

Its 1.401(a)(4)-2©(3) ...the ratio percetage of the rate group is determined taking into account all nonexlcudable employees regardless of whether they benefit under the plan.

[Guest Sieve]

Thanks, Tom. I so rarely work with plans which exclude a group of employees (other than those who are subject to a CBA) that I was simply visualizing the OP in terms of the rate groups I normally deal with--all employees, except those excluded for age & service--not considering that there are non-excludables out there who do not benefit.

And, yes, I'm waiting for the call to put on the pads for yet another season in net. I guess you'd say I'm waiting in the wings for the Wings. Somehow I don't think they'll need me, so I'll have to be content playing in the cornfields with Shoeless Joe and the other ghosts . . .

[Tom Poje]

have you thought about baseball?

[Guest Sieve]

I always thought I'd have to be a catcher, but now I know better . . . !!!