414(s) compensation

[Guest ENT]

Can a definition of compensation satisfy 414(s) if it excludes amounts earned by ineligible employees who are nonexcludable for purposes of 410(b)? For example, our plan does not cover employees in Division C. Because there are not many employees in this division, we can exclude them and still pass the minimum coverage requirements. When we go to perform the 401(a)(4) testing, can we exclude their compensation? I do not believe that we can because it wouldn't likely qualify as a valid 414(s) definition.

Does anyone disagree?

[Guest On Hiatus]

Can a definition of compensation satisfy 414(s) if it excludes amounts earned by ineligible employees who are nonexcludable for purposes of 410(b)? For example, our plan does not cover employees in Division C. Because there are not many employees in this division, we can exclude them and still pass the minimum coverage requirements. When we go to perform the 401(a)(4) testing, can we exclude their compensation? I do not believe that we can because it wouldn't likely qualify as a valid 414(s) definition.

Does anyone disagree?

I disagree. You only have to include compensation earned while a participant when doing 401(a)(4) testing. (If you are doing average benefits testing, however, the answer may well be different.)

[Tom Poje]

not quite sure where the question is headed.

certainly you only have to include comp from date of participation.

and if someone switched from union to nonunion, since the tests are separate, you only use comp while union or while nonunion depending on which group you are looking at.

and if someone is a member of an excludable division, then they are includable and not benefiting for coverage.

if this is an attempt to ay something like

Div X is ecluded from participation.

in addition, all comp from Div X is excludable.

therefore, since the person has no comp I don't use them on a(4) testing because you can't divide by 0, then I think you have problems.