Control Group Issues

[Guest Nanetta45]

We have a client that is an 80% owner of another company (the company was acquired in mid 2007). The two companies have separate plans. For plan years 2007 and 2008 no combined testing is needed because of the transition rule but for 2009 we must combine the two plans and test for coverage. The problem is that the two plans have different eligible requirements and different employer contributions. Our client eligibility is age 21 and 3 months of service while the other plan's eligibility is age 18 and one year of service. Also, our client's plan has a 3% Safe Harbor Non-Elective while the other plan has a matching contribution of 50% up to 3% of compensation. My question is for combined testing purposes which eligibility requirements should be used?

[Mike Preston]

You have options. You can combine or test separately. And after making that decision, you can test by separately testing those who meet statutory eligibility and those who do not. And those are just the "basic" options.