Coverage Failure - 401k

[Guest RS182]

I have a control group situation that causes an employer to fail 410b on their K source. Debating on weather running and passing ABT is acceptable to pass coverage for the K source. Comments on that?

Trying to avoid retro-active amendments and QNECS.

[Laura Harrington]

I have a control group situation that causes an employer to fail 410b on their K source. Debating on weather running and passing ABT is acceptable to pass coverage for the K source. Comments on that?

Trying to avoid retro-active amendments and QNECS.

Is there wording in the plan document that says absolutely, no matter what, the plan must pass coverage using the ratio percentage test and the average benefit test is not an option?

Assuming this wording is not in the plan document, then there is no reason why you cannot try the average benefit test before you resort to retroactive amendments and QNECs.

[Guest RS182]

I may have, as with all post on a message board, left out the detail that the only contributions into the plan for the applicable plan year are deferrals.

In this 'situation' we are assuming that the document is NOT an issue. ABT would be allowed in the plan doc.

[Laura Harrington]

I may have, as with all post on a message board, left out the detail that the only contributions into the plan for the applicable plan year are deferrals.

In this 'situation' we are assuming that the document is NOT an issue. ABT would be allowed in the plan doc.

There is nothing in the Code or the Treas. Regs. that limits the use of the average benefit test to only plans that have employer contributions.

Are you thinking that because the Code says that the ADP test is the only method that can be used to show that the amount of deferral is nondiscriminatory, that you may be prohibited from using the average benefit test since the only contributions are salary deferral?

Remember, you are not testing for nondiscrimination; you are testing for coverage. Coverage and nondiscrimination may be related to each other, and in many ways rely on each other, but they are two separate requirements.

[Guest RS182]

Thank you Laura. Starting thinking about stuff to much and well............