Prior year testing with no prior year NHCEs

[Bird]

I know it's been discussed here and I think the answer is - if the plan uses prior year testing, and there were no NHCEs in the prior year, then the HCEs are not subject to testing.

Yes?

[Kevin C]

Yes.

1.401(k)-2(a)(1)(ii)HCEs as sole eligible employees.—

If, for the applicable year for determining the ADP of the NHCEs for a plan year, there are no eligible NHCEs (i.e, all of the eligible employees under the cash or deferred arrangement for the applicable year are HCEs), the arrangement is deemed to satisfy the ADP test for the plan year.

1.401(m)-2(a)(1)(ii)HCEs as sole eligible employees.—

If, for the applicable year there are no eligible NHCEs (i.e., all of the eligible employees under the plan for the applicable year are HCEs), the plan is deemed to satisfy the ACP test.

[Bird]

Thanks...after posting I had a recollection of it being in the regs but you saved me some trouble.