Coverage test for 401(m) portion of plan

[jkharvey]

The employer maintains 401k plan w/ ER match. The plan has a last day rule. When the plan is disaggregated for coverage purposes, the 401(m) portion fails the Ratio Percentage Test. Is this portion (matching contributions only) of the plan tested separately for the Average Benefits test to see if coverage is passed?

[Guest]

The avg ben pct test includes all contributions - deferrals, match, ps and any forfeitures.

If you fail 410(B) for the 401(m) portion then you must pass:

avg ben pct test AND

your ratio % must be > safe harbor %

there is no midpoint as in rate group testing with cross tested plans.

By the way, the matching portion is already tested seperately - you do that in the ACP test.