414(s) Compensation Question

[justatester]

Rev. Proc. 93-42 1.01 states "Specifically, the guidance applies for purpose of substantiating that a plan satisfies the following requirements:...and nondiscrimination with regard to an alternative definition of compensation under section 1.414(s)-1(d)(3) of the Income Tax Regulations....Unless specifically provided otherwise, this revenue procedure does not apply to the special nondiscriminatory amounts test under section 401(k)(3) or (m)(2)." Section 5 of this rev. proc provides the standards under which an employer can rely on a prior year's test but it seems to be excluding the ADP/ACP tests...

Ok...so does that mean

If a plan is required to perform a 414(s) compensation test because they use a non-safe harbor definition of compensation for their 401k and 401m test (test compensation), are they required to perform this test on an annual basis? (The compensation used for their 401k and 401m test is the same as their eligible plan compensation.) Or can they complete 414(s) testing every 3 years?

[Tom Poje]

without looking it up, I had thought that '3 year testing' only applied to coverage, and specifically only if there weren't major changes (e.g. in a small plan I would consider going from 1 HCE to 2 HCEs a pretty major change.