Cross tested allocation

[Guest Jane Freeman]

A 401(k) plan requires 1 year of service to enter the 401(k) and 2 years of service to become eligible for the profit sharing. When calculating the cross tested profit sharing contribution, should the participants who are eligible for the 401(k) but not yet eligible for the profit sharing be included in the average benefits test? Any help will be appreciated. Thank you.

[Guest]

You include all employees in the average benefits % test. when you are doing the rate group testing you include only those ees eligible for the profit sharing portion of the test.