401(a)(4) Rate Group Testing

[Guest elang]

I am a relatively new administrator and wanted to verify the following:

1. If my plan passes the ABT, the threshold for passing 410b w/in each rate group is the midpoint, correct?

2. Assuming each rate group passes and I satisfy Gateway requirements, do I pass 401(a)(4) or is there anything else?

3. When testing each rate group, can I exclude Eligible Terminated Employees w/ less than 500 hours?

Thanks in advance for your comments & help

[Lou S.]

For a new administrator it sounds like you've covered the bases of a straight forward cross-testing 101 scenario.

On 3, yes you can exclude them unless they received some 401(a)(4) allocation, such as in a safe harbor 401(k) with 3% non-elective - in which case they might need additional allocation if your gateway is over 3%.

[Tom Poje]

you can only exclude eligible terminees with less than 500 hours if they received no non-elective contribution (e.g. profit sharing and forfeiture) AND they were a participant. for example, if you have a controlled group and did not aggregate plans for testing you could not exclude eligible terminees with less than 500 hours from the other plan.