New Comparability Plan

[Alex Daisy]

I am working on a New Comparabilty Plan with a Last Day & 1,000 hours rule.

If a employee is terminated in the year, but works more than 500 hours, and does not get the Profit Sharing Contribution, do they have to be included in the New Comparabilty calculation with a zero EBAR?

[Tom Poje]

if they have entered the plan, then yes, they show up as a zero.

in fact if it is a 401k plan, and they had less then 500 hours they would show up on the avg ben pct test as well with a zero because they could have deferred (whether they did or didn't), but they could be excluded from the rate group test.

[austin3515]

I agree they show up in Average Benefits, but I believe they do NOT show up in rate group testing, UNLESS of course they are receiving an allocation (such as a 3% SHNEC).

[Tom Poje]

1.410(b)-6 lists the people who are exludable.. in particular, (f) says terminees with less than 500 hours who do not benefit.

there is nothing that says terminees that terminate with more than 500 hours who do not benefit.

the 401(a)(4)rules follow the guidelines set forth in 410(b)

[austin3515]

in particular, (f) says terminees with less than 500 hours who do not benefit.

Perhaps I am missing somethihng here, but based on your quote, my answer would be accurate? Terms with breaks who are not getting a contribuion are excluded from rate group testing. I think this was the OP's question.

[Lou S.]

term with more than 500 and no allocation, yes zero EBAR.

[austin3515]

my bad, I read it as less than 500

[Tom Poje]

join the club of mis-reading things. the line forms on the right and currently extends quite a distance.

[WDIK]

join the club of mis-reading things. the line forms on the right and currently extends quite a distance.

I thought the instructions read to form the line on the left?

[Mike Preston]

if they have entered the plan, then yes, they show up as a zero.

Assuming the reason they did not enter the plan was due to age/service restrictions. If they would have entered the plan had they not been in an excluded group, then even if they have not entered the plan, then yes, they show up as a zero.