cross testing revisited & Relius

[pmacduff]

ok- plain vanilla crosstested integrated profit sharing plan (no 401k, SH, etc.) Split into 2 component plans to pass nondiscrimination testing. Plan passes coverage as a whole and both component plans pass no problem. Both pass 401a4 as well.

My question is...when I put my employees into the 2 "divisions" does it really matter where I put the employees who have not yet met the eligibility requirements of 1 YOS age 21 since they don't impact the testing?

I left them in the Relius "default" division, but seems to me I might want to put them one of the groups so that all employees are reflected in the 2 groups non discrim reports.

Am I overanalyzing? We had a client's crosstested plan go through an IRS audit, and after having spent so much time with the auditor on all the reports and details, I'm thinking it might be best if those noneligble excludables show up somewhere on the nondiscrim reports.

[Tom Poje]

if these folks are ineligble, don't they show on the 'excludable' report already?

wow, someone bold enough to do component testing! 10 points for getting through the work around!

[pmacduff]

Hey Tom - yes they do show on the excludable report if I run a 3rd report using the "default" division. I was trying to cut down on that so I thought why not put them in one of the 2 "divisions" I have in the census data for the eligibles, then they show up on that report and I only have 2 sets of reports instead of 3. not a big deal but might save some trees!!!

I have to say that I'm more comfortable with using the component plan testing after going through that audit!!! I think the auditor and I were learning many different nuances together! He's a very knowledgable auditor that we have worked with in the past. He mentioned that they like having a TPA involved in the audit when it's a crosstested plan because he doesn't process plans on a regular basis and the clients are usually lost when it comes to the cross testing

tons of fun!!!

[BG5150]

I'm not sure what version of Relius you are using, but in the one we use, 13.x, there is an "Allocation Classes" feature. It is in Plan Specs-->Allocation Provision window-->5th tab.

There you can set up all your allocation groups and choose one to be the default. On the participant's status/service screen, there is a place the group can be entered. (It can also be imported) This way you avoid the default division altogether.

When doing the PS allocation, you choose Allocation Class instead of Division and you can put the all dollars/percentages for each group in right there.

(I also try to put the people into corresponding divisions so when I run my contribution reports, I can break it down by group, but it's not necessary to get a PS allocation done.)

And to answer your original question: I think it would be best to put the not-yet-eligible people into the group they probably will be in once they become eligible. Like people have said, they will fall to the excludable reports anyway, and you will have less work to do in changing them around into the proper groups once they become eligible.

[Tom Poje]

I did manage to modify the nondiscrim report 401(a)(4) to indicate how many NHCEs and HCEs were entered under the nonexcludable/not benefiting field, so I have at least a start toward a better report if you are doing component plan testing.