Avg Benefits Test and Cross Testing

[Guest Michele Ciz]

I have a profit sharing plan, only, and needs to be cross-tested due to the group allocation of the contribution.

The plan is passing the ratio test, but failing avg benefits test. So, I am not passing 401(a)(4). Is there a way I can break the plan into component plans, and pass the avg benefits test and 401(a)(4)? Or, am I stuck because I am failing ABT, so I can not do the component plans?

[Tom Poje]

1.401(a)(4)-9©(4) is clear that a component plan is deemed to satisfy the avg ben pct test if the plan of which it is a part satisfies avg ben pct test.

that doesn't necessarily mean your cooked, for if all rate groups pass ratio% test you still pass