Controlled Group and Coverage

[perkinsran]

We have two companies in a controlled group that sponsor separate plans. Both have several hundred NHCEs, but company A has the majority of HCEs. We have to run coverage and I just wanted to confirm mechanics.

Co A plan has 17 HCEs and it is a 401k plan with a safe harbor match.

Co B has 2 HCEs and it is a 401k plan with a Prevailing Wage contribution to virtually all NHCEs but not HCEs.

Company's A's matching arrangement will fail the 70% coverage test so we need to go to ABP test. The plan will pass the safe harbor % stipulated in test 1 of th ABP test. So when we run the ABP, we use 401k, 401m and 401a contributions from both companies. We easily pass due to the very high PWC contribution. Correct or am I missing something?

[Tom Poje]

that sounds correct. though you can't aggregate for nondiscrim testing, you have to aggregate for the avg ben pct test