Combined Testing

[sdix401k]

I have a control group situation where there are two seperate plans with identical provisions. They are bothe Safe Harbor Match plans with a crosstested profit sharing. I have combined testing in the past to pass the general test.

Plan B is now being terminated as of 07/01/12 becuase of a sale of that business.

My question is in regards to combining testing for the 2012 plan year. I have read that in order for plans to be aggregrated that the plan year needs to be the same to determine non discrimination classification and the ratio test. They can be different to perform the Average Benefits Test.

Can the plans be aggregated for testing? If they cannot I assume that an employer contribution that is nuniform across all participants would be the only acceptable ps contribution.

Any thoughts??

[Mike Preston]

It depends on how the plan is being terminated. If the plan document is changed so as to create a short plan year, you may not combine. If, however, the plan year remains the same and the only thing that is happening is that the plan is being terminated mid-year then there is no prohibition on combining the plans for testing.

[sdix401k]

Thanks Mike. The plan will be just be terminated due to the sale with no change in the document.

You bring up an interesting point. To confirm the termiantion of a plan does not create a short plan year.

Thanks