410(b) Excludable Employees

[Guest yahoo]

Plan A covers all employees of member A of a controlled group (plan does not apply any minimum age and service requirement). Plan B covers all employees of member B of the same controlled group. Plan B' employees must satisfy the minimum age and service requirement of 21 years and one year of service. For the 410(B) minimum coverage ratio percentage testing, are any employees excluded from testing? Cites?

[Tom Poje]

given the conditions cited, should be able to test using statutory exclusions as well...

1 group all <21 <1 yr svc

2nd group, >21 and 1 yr svc

that might help

[MWeddell]

See Treas. Reg. 1.410(B)-6(B).

If you're testing plan A, no one is excluded. If you're testing plan B, exclude those < 21 years old or < 1 year of service. If you're aggregating the plans for coverage and other testing, then no one is excluded.

[Guest yahoo]

What considerations go into whether to test separately or in aggregation?

[MWeddell]

Whether to test together or test separately is just a matter of which method works. Testing together (with or without the modification Tom Poje suggests) makes 410(B) coverage testing less likely to fail, but then you have to test together for 401(a)(4) and 401(k)/401(m) tests too. Usually there are plan differences that will cause benefit, rights, and features to be available only under one of the plans, so that'll need to be tested under Reg. 1.401(a)(4)-4.

Typically, you test the plans separately and only if that doesn't work out for some reason do you consider testing the plans together.

Hope that helps you.