Early Participation Rule

[RDY2RTR]

When running the ADP test, we can disaggregate otherwise excludable employees using the early participation rule or running two separate tests. Can the early participation rule be used in the 410b test also or is it's use limited to the ADP and ACP tests.

Thanks.

[PensionPro]

It can not be used for 410(b).

[Guest Sieve]

PensionPro -- What about Treas. Reg. Section 1.410(b)-6(b)(3)?

[PensionPro]

PensionPro -- What about Treas. Reg. Section 1.410(b)-6(b)(3)?

Beginning with post-1998 plan years, SBJPA provided that instead of performing two separate restructured ADP tests, a plan may perform a single ADP test that compares the ADP for all eligible HCEs with the ADP for not otherwise excludable NHCEs.

401(k)(3)(F)Special rule for early participation –

If an employer elects to apply section 410(b)(4)(B) in determining whether a cash or deferred arrangement meets the requirements of subparagraph (A)(i), the employer may, in determining whether the arrangement meets the requirements of subparagraph (A)(ii), exclude from consideration all eligible employees (other than highly compensated employees) who have not met the minimum age and service requirements of section 410(a)(1)(A).

The special rule is found under 401(k) only, and not under 410(b). Hope that makes sense.