Cross Testing Failure & Testing requirements

[Dazednconfused]

Hi,

Plan is cross tested, HCE group & NHCE group, only one participant in each group this year, the NHCE is older by ten years. I am failing 401(a)4 testing. If I bump up the NHCE to the same allocation percentage as HCE do I still need to run 401a4 test or am I fine with just running & passing 410b? Just wondering....

Thanks

[Tom Poje]

there is nothing to prevent you (aside from a poorly written document) from testing on an alloaction basis.

of course, if you did that you already know that each person will have the same alloaction rate, so it is really only going through the motions.

on the other hand, I will take a guess that each person is in their own group, so you could run an allocation as if the plan is integrated and then test imputing disparity. this would give the HCE a slightly higher % than the NHCE

[Dazednconfused]

there is nothing to prevent you (aside from a poorly written document) from testing on an alloaction basis.

of course, if you did that you already know that each person will have the same alloaction rate, so it is really only going through the motions.

on the other hand, I will take a guess that each person is in their own group, so you could run an allocation as if the plan is integrated and then test imputing disparity. this would give the HCE a slightly higher % than the NHCE

Thanks, good idea I will give it a try.

Also, on side note, if the plan has classes of hce & nhce, can the plan have a top paid election or is there anytype of requirement that it must/must not? It seems like it would impact the hce class in the testing (this is my random thought for the day... I think).

Thanks again for the help.

[BG5150]

on the other hand, I will take a guess that each person is in their own group, so you could run an allocation as if the plan is integrated and then test imputing disparity. this would give the HCE a slightly higher % than the NHCE

Assuming the HCE made more than the TWB.