Control Group and Coverage question

[Guest M. Martin]

Two part question:

1) There are two companies who are a control group and it would be more beneficial to test separately. For coverage purposes how should a Non-Key HCE be treated who has compensation from both companies and participated in both plans?

Company A has a total of 9 HCEs including him.

Company B has a total of 3 HCEs including him.

For Co. A’s coverage test would it be 9 HCE Benefiting and Co. B 3 HCEs Not Benefiting or only 2?

2) Second question, if Co. A fails the coverage test, can a corrective amendment be adopted to bring in enough NHCEs to pass Coverage so that the 2 plans can still be tested separately?

[Laura Harrington]

Two part question:

1) There are two companies who are a control group and it would be more beneficial to test separately. For coverage purposes how should a Non-Key HCE be treated who has compensation from both companies and participated in both plans?

Company A has a total of 9 HCEs including him.

Company B has a total of 3 HCEs including him.

For Co. A’s coverage test would it be 9 HCE Benefiting and Co. B 3 HCEs Not Benefiting or only 2?

2) Second question, if Co. A fails the coverage test, can a corrective amendment be adopted to bring in enough NHCEs to pass Coverage so that the 2 plans can still be tested separately?

#1: 2 not benefiting. Each employee is only included in the test once.

#2: Yes.