Excluded Divisions, ACP Testing, and Coverage Testing

[buckaroo]

I have a plan that has employees in multiple divisions. The plan allows all of the employees of all of the divisions to make elective deferrals (when the meet eligiblity and entry dates). The plan allows employees of only two of the divisions to receive matching contributions. The plan's definition of an eligible employee specifically excludes all but two of the divisions from the matching contribbutions.

My issue is how should these people be treated for ACP testing and coverage testing. My thought process was that they are excluded from the matching source via the definition of eligible employee and therefore should be excluded from the ACP and in the coverage, not benefitting group in the coverage testing.

From my reading of the EOB, it says that when there is a discretionary matching contribution and one group is given zero, there are two possible options available: One is as I have thought above and the other is to include them in the ACP as zeros and include them in the benefitting group for coverage. My issue with this is that this talks about a discretionary matching contribution that can be give at different levels. My thought is that this may different as my situation specifically excludes them from the testing.

I use Relius and I posted a matching transaction for the each specific division that was to receive the matching contribution. When I run the ACP, it includes the folks who are not eligible for the match as 0%. It also includes them as benefitting for the covereage testing. This seems to support the second theory, but I may have a coding issue as to how I have set-up Relius.

Does anyone have an opinion regarding the which methodology is correct or even preferable? Any thoughts are greatly appreciated.

[Tom Poje]

the regs, 1.401(m) speaks of 'eligible' employees. therefore if one can't receive a match they are not included. e.g. this will happen if there is an hours requirement or last day provision, such individuals are not included on the ACP test. (and Relius will handle as such)

so therefore, it must be in the way of coding, and as much as I am familiar with the system, I've never had to code for such a situation..

I guess what you are supposed to do is under sources you could have coded match as having an excluded class 'other' and put those people in that group.

without having to reset everything, rerun eligibility, etc., I suppose you could simply put them in a definition, and then when running the ACP test exclude that division (but I don't think you can run ADP / ACP separately.

The other option is simply to go into census and manually code those people as excludable from the ACP test

[BG5150]

In Relius, there is a set of "stock" excludables, such as "hourly," "union," "commission," etc. One of them is "Other."

If you are not already using "other," you can code the people who are not getting the match as an "other" and make them ineligible on the SOURCE level (rather than on the Plan Entry screen.

[buckaroo]

Thanks for the replies. I agree that they should not be in the ACP test and should be included, but not benefitting in the 401(m)coverage testing. As for the system, before I sent the messge, I had already:

• I went down to the Excluded Classes section and checked the “Other” box. I then filled in “Excluded Group” in the text field. I clicked modified and exited the Plan Specs.
• I created a DER for SSN, Employee Type Code, and Employee Type Date. I imported the SSN, “O” for the type code, and the first day of the plan year for every participant.
• I reversed all of the transactions in the plan year being tested (including the eligibility transactions). I checked the box “Compute Comp and Hours” on all transactions that I wanted to post. I then re-ran all of the transactions.

I ran the ACP test (including Include in Test for the Statutory exclusions) and it still shows the entire population included in the ACP testing. I have sent this off to Relius for their review. I think I am going to manually code the "Include in ACP" and "401(m) plan" under Benefitting Determination in census.

Does anyone have any additional thoughts?

[BG5150]

Do these people have a " * " next to their ACP #'s when you run the test?

[Tom Poje]

under 'source', for match/source override

did you check 'other'