Permissive Aggregation

[Guest naveen]

Need help understanding Permissive Aggregation.

Employer Sponsors three Plans.

Total Work Force in Division A & B is 53

2 HCEs and 25 NHCEs in division A

1 HCEs and 25 NHCEs in division B

Plan 1 - Safe Harbor 401(k) Plan for EEs of Divison A (satisfies 401(a)(4) on stand alone basis)

Plan 2 - PS Plan for EEs of Division B

Plan 3 - Cash Balance Plan for EEs of Division B

Can the employer elect to aggregate Plan 1 with Plan 2 to satisfy 401(a)(4) - Rate Group General test

Thanks for your help in advance

[Bill3]

If the 401(k) plan has a 401(a) profit sharing component (e.g., the 3% non-elective safe harbor is being used) then the 401(a) portions of the two plans can be tested together. It's not unheard of for a partnership to have a safe harbor 401(k) using the 3% approach (plus an additional 2% or 4.5%, as needed) and a separate DC plan for partners only, and these plans are aggregated for 401(a)(4) testing. There are some limits on what can be done with the 3% in that test, such as no imputed disparity.