Need Help with 410 (b) Calc (Corrected Summary)

[Guest GG]

Company has 2 401 (k) Plans. Plan 1 benefits only the employees of Division A. Division B is excluded by class. Eligibility for this Plan is age 21/1 year of service and the entry dates are 01/01 and 07/01. Plan 2 benefits only the employees of Division C. There is no age/service requirement and the entry dates are 01/01 and 07/01. The plans are combined for purposes of 410 (B).

With the following data, can I assume I pass the ratio percentage test on a combined basis?

Plan 1:

Total Employees 1183

Total Excludable 1091

NHCE's Benefiting 71

NHCE's Not Benefiting 163

Total Nonexcludable NHCE 234

HCE'S Benefiting 21

HCE's Not Benefiting 0

Total Nonexcludable NHCE 21

Plan 2:

Total Employees 453

Total Excludable 149

NHCE's Benefiting 304

NHCE's Not Benefiting 0

No HCE's in this Plan

Since the two plans have different eligibility requirements, I'm not sure which employees are excludable when testing on a combined basis.

Thanks.

[Wessex]

Section 1.410(B)-6(B)(2) provides that for a plan that has two or more different sets of age and service conditions, only employees who fail all sets of conditions are excludable. Keeping in mind that under the 410(B) regulations "plan" includes two or more plans that have been aggregated, this would mean that in this situation - becaues one set of conditions impose no age or service requirements - there are no excludable employees (unless there are bargaining unit employees or non-resident alien employees).

I'm not sure I understand the numbers shown for the coverage data. Regardless of whether the plans are aggregated or not, total employees should be the total number of employees in the controlled group. If for illustration purposes the numbers are only as to the employees who could be eligible to be covered by each plan, who are the excludable employees for plan 2? Are there employees excludable for reasons other than failing to meet the age and service requirements?

[This message has been edited by Wessex (edited 01-29-99).]

[Guest GG]

In Plan 2, the excludables are the employees hired after July 1. Although there's no age/svc requirement, there's still the dual entry date (01/01 and 07/01).

If I'm understanding the regulations correctly, only employees that were employed after July 1, are excludable?

If this is correct, then I need to count the number of employees from Divison A (Plan 1) that were employed as of July 1 , as not benefitting and not excludable?

Thanks.