Number of groups in document vs in test

[bevfair]

I have a plan document that is written with 3 groups. Group 1 is the owner, group 2 is participants with more than 35 years of service and group 3 is all others. If the sponsor wants groups 2 and 3 to receive the same contribution percentage, can I code my testing system to allocate based on 2 groups? Is there a risk that in doing so, if discovered under audit, the IRS/DOL would question why the doc has 3 group but the test only has 2?

[Lou S.]

I really don't see a problem at all.

Many documents put each participant in their own group in the document but in reality when it comes to the acutal allocation one or more groups (usually the owners) get one rate and all other groups (usually the NHCEs) get another rate unless you need to give some NHCE an increase to pass testing.

[ETA Consulting LLC]

True,

Regardless of how the amounts are allocated, they are going to be tested the same (e.g. a rate group is defined as an HCE and all employees receiving a rate at least equal to that HCE).

The only thing you can't do when there is 3 defined groups is have more than 3 allocation percentages. You can alway have less.

Good Luck!

[Tom Poje]

technically if you have 3 groups you could have more than 3 allocation pecentages if there are top heavy/gateway minimum issues, but as a general rule that is a true statement.