General Testing and BRF Testing

[justatester]

I always get confused with these tests.....

Here is the situation (3 Plans):

1) 401(k) Plan with Match (with multiple match formulas) and 2 separate PS contributions (3% and 4.5%)

2) MPP Plan with service based formula

3) 401(k) Plan with Match

Everything passes coverage on its own (taking the CG into consideration) except the 4.5% contribution. I can "aggregate" the 3% & 4.5% to pass the ratio test. Doing this would then require General Testing. Question: for the General Test-do I just include the 3 & 4.5% contribs or do I need to include the MPP contribution? If I don't include the MPP, it is subject to its own General Test, Correct?

For BRF, I would "test" each level within the first plan and count the level in the 3rd plan as not benefiting? In other words, they would be in the denominator of the counts? Or do I have to "test" their level against plan #1's?

[Mike Preston]

BRF testing is mutually exclusive to amounts testing.

[Tom Poje]

for plan 1 for coverage, it does not matter if you have 2 ps formulas (3% and 4.5% ) both of those are nonelctive contributions, so someone is benefitting either one or the other (or both), so not quite sure what you are asking in your question.

[justatester]

In plan number 1, you either receive the 3% or the 4.5% contribution, but not both. If receive one of the ps, then you do not receive the MPP Contribution.

I understand that BRF is separate from General Testing...My question was whether or not Plan #1 & 3 need to be tested together for BRF.

Hope this makes sense.

[Mike Preston]

What are you testing? You haven't described a single thing that requires BRF testing.

You NEVER test contribution amounts under BRF.

You are also confused about the amounts testing with respect to plans 1 and 2. If plan 1 stands on its own with respect to coverage, then you may test it alone or combine it with plan 2 at your option when testing for non-discrimination.

With respect to the general test for the MP plan I don't think you have given us enough information. It may very well be that the service related formula satisfies one of the safe-harbors and does not require that it be general tested.

[justatester]

I understand that ps contributions are not part of BRF. The BRF question comes into plan since plan 1 has 3 separate levels of match depending on the location/employer. (1=50% to 5%, 2= 50% to 6%, 3= 50% to 2%) Plan 3 has a match of 50% to 4%. When running the BRF test do I test all 4 levels of match?

As far as the PS contribution for plan 1, group 1 receives a 4.5% contribution-Mostly HCEs in this group. Group 2 receives a 3% contribution-mostly NHCEs. Group 1's ratio is 47%. Group 2's ratio is 98%. Tested together as one "plan" they pass ratio. However, it is my understanding that since the "rate" is different, they would need General testing. Would the General test only test these 2 rates?

[Mike Preston]

I'm sorry, but we all have limited time that we can devote to questions like this.

Yes, you must test each separate level of match under BRF.

To repeat: "If plan 1 stands on its own with respect to coverage, then you may test it alone or combine it with plan 2 at your option when testing for non-discrimination."

If you decide to test plan 1 alone, as Tom says, you would test all of the contributions in one fell swoop.