Average Benefits Testing

[justatester]

Here is the situation:

The profit sharing component of a 401(k) Plan is not passing the ratio test for coverage. The Main populations ratio is 68% and the "otherwise excludables" ratio is 3.25%. Average Benefits would help the main group, but obviously not the "otherwise excludable" group. My question is, can we run the Average Benefits tests not disaggregated for the sole purpose of running the ratio test for the profit sharing piece not disaggregated? Or if we run the Average Benefits test not disaggregated, does that mean we now need to run all testing not disaggregated?

Any thoughts would greatly be appreciated!

[Mike Preston]

You may run disaggregated testing for 401(k) non-discrimination and non-disaggregated for PS. Keep in mind that there are special 401(k) aggregation rules that apply to HCE's even if you run on a disaggregated basis.