Weighted Average for ADP for Permissive Aggregation

[MLML]

Hello,

A sponsor has two plans covering different companies. Plan A has been in existence for 3 years, and Plan B is new in 2012.

For the 2012 Plan Year testing, both Plans have to be permissively aggregated for coverage, and non discrimination testing.

Both Plans use prior year testing method. Since the Plan A has been around for a few years, the prior year testing percentage is known, but I am not sure what percentage to use for the Plan B to come up with the Weighted Average for the combined plan.

Plan B's document says the Plan uses 3% rule for the first year.

I appreciate your time and response.

Thank you.

ML

[MLML]

Clarification - there was no spin off or anything. The sponsor always had two companies, and the Plan A was created for a company A about three years ago. The coverage always passed for Plan A (even though company B's employees were not covered) as there were no highly compensated employees in company A.

In 2012, the sponsor decided to create a Plan B for company B covering only company B employees. Some of the highly compensated employees from company B were moved to company A during the year as well, and therefore both plans are subject to coverage testing and non discrim.

Thank you.

[Tom Poje]

I haven't seen that one adressed, though I would assume you would take the number of NHCEs who 'would have been eligible' in Company B and use a 3% average.

Then use the weighted method when combing the 2 plans to determine the average.