Coverage Test - RPT or ABT

[emmetttrudy]

A Defined Benefit Plan must pass either the ratio test or the ABT to pass coverage, correct?

We submitted a Plan to the IRS for a DL upon termination and they are questioning why some of the variations of the ABT fail, and are wondering if this means the coverage test fails as a whole (interestingly, they are posing this more as a question to us, as opposed to a statement off act - shouldnt the IRS know the rules??). Seems to be a moot point however, since the Plan passes the ratio test, which means it passes coverage.

[AndyH]

Why would they have ABT details if the ratio percentage test passes?

[emmetttrudy]

Because the standard output from the valuation software (Relius) shows the results from both tests.

[John Feldt ERPA CPC QPA]

shouldn't the IRS know the rules? Yeah, but you have to expect inconsistency sometimes.

Note for future: only give the IRS exactly what they asked for. Don't give extra information, like failed versions of tests that occurred before a testing method was found that passed.

[SoCalActuary]

shouldn't the IRS know the rules? Yeah, but you have to expect inconsistency sometimes.

Note for future: only give the IRS exactly what they asked for. Don't give extra information, like failed versions of tests that occurred before a testing method was found that passed.

That same advice applies to CPA audits, where you are training the green young auditor how ERISA works.