General Test

[justatester]

I have a plan that needs general testing. The plan does not pass on a dc basis...However, they do pass on a db basis. My question is can they be tested for general testing on a db basis as a stand alone plan if they have an active db plan? Or if we go to a db basis do I have to aggregated the db plan in? Both plans pass ratio coverage testing.

[ETA Consulting LLC]

Your fact pattern isn't detailed enough. You can cross-test a plan without having to perform the average benefits test. As long as each rate group passes the coverage ratio test, you should be fine. However, this only deals with testing one source of money (e.g. nonelective contributions). If the nonelective contributions are allocated under a uniform formula, then cross-testing shouldn't buy you anything.

Now, if you are combining deferrals and matching contributions in your test, then you must bring in all other plans (including DB) because you are no longer testing one source of contributions.

More details on exactly what is failing, why it is failing, and how you are testing may help in getting you the answers you seek.

Good luck!

[justatester]

Ok...here is some more detail...

27 HCEs. 27 NHCEs.

All participants receive a 10% ER contribution.

Plan wants to give an additional 15% contribution to 2 HCEs

On a DC basis, the plan does not pass general testing. On a DB Basis, plan passes with all "ratios" well above 70%. Since they are all above 70%, I don't need to go to average benefits, therefore do not need to bring in the DB plan's allocations. Is this correct?

[ETA Consulting LLC]

You are correct. There is no need to perform the average benefits test.

[justatester]

Ok..let's say one of the rate groups falls below 70%...Avg Benefits would be needed to pass. At that point, I would bring in the DB in order to use a lower ratio correct?