MarZDoates Posted January 7, 2014 Posted January 7, 2014 This is my first time dealing with a S/H 401(k) Plan when the sponsor also has a DB plan. Is there any special or combined testing that needs to be done? I have very little knowledge of DB plans. (Our firm handles the DC...another firm handles the DB). I do know that it is NOT a cash balance plan and the DB does NOT contain floor offset. Thanks in advance for any help you can give me. QPA, QKA
Effen Posted January 7, 2014 Posted January 7, 2014 Let the other firm do the ND testing. If you "have very little knowledge of DB plans", your learning curve could get very expensive. Other than that, the rules are all there in 1.410(b) and 1.401(a)(4) and (a)(26), plus a few significant IRS internal memo's that have become public. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
MarZDoates Posted January 7, 2014 Author Posted January 7, 2014 I would be happy to let them do the testing. One of their employees said that since it is not a CB plan, there isn't any combined testing that needs to be done...that we could just do the coverage and non-discrim for the DC plan (which is cross tested) and they would do the testing for the DB plan. Does that sound correct? Meanwhile I'll take a look at your citation. Thanks! QPA, QKA
david rigby Posted January 7, 2014 Posted January 7, 2014 One of their employees said that since it is not a CB plan, there isn't any combined testing that needs to be done...that we could just do the coverage and non-discrim for the DC plan (which is cross tested) and they would do the testing for the DB plan. Does that sound correct? There may or may not be "combined testing", but this will not be "since it is not a CB plan". I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
shERPA Posted January 8, 2014 Posted January 8, 2014 The DB may very well be designed such that it stands on its own and is not aggregated with the DC plan. If this is the case, it is likely that the client is being more generous to the NHCEs than would be necessary if the plans were aggregated. Maybe that's OK with the client, maybe not. Just sayin'.... I carry stuff uphill for others who get all the glory.
Effen Posted January 8, 2014 Posted January 8, 2014 It could be correct. Check with the actuary and see if the DB satisfies the applicable non discrimination tests on its own. If it does, then you don't need to be concerned about it, expect maybe for the Top Heavy requirements. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
rcline46 Posted January 8, 2014 Posted January 8, 2014 You also should make sure that permitted disparity is not being used in both plans. Since your plan is cross tested, you may be using permitted disparity in the testing, and if the DB plan is integrated, that is a no-no.
AndyH Posted January 8, 2014 Posted January 8, 2014 There are also potential 404 issues. Two plans handled by different firms = three parties asking for trouble IMHO. david rigby and K2retire 2
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