ADP/ACP and Compensation Testing

[bevfair]

I have a plan that excludes comp for employer provided health coverage, commissions and incentives for all purposes. For match, it also excludes bonuses. Compensation is from date of entry. Deferral entry is first of month following 90 days. Match entry is first of month following 1 year of service. It is possible to have some participants with 2 different date of entry compensation amounts for one year.

I have been running the ADP/ACP testing using 415 pay for the full year. Most of my newly eligible participants are statutorily disaggregated the first year. When I started doing this I had found references that said I could test using full year/415 comp. Now I'm not finding that information. Am I still okay?

Next, when I run the Compensation Ratio test, which compensation do I use for my mid-year entrants? Am I testing date of entry plan pay against full year 415 pay? Or do I test date of entry plan pay against date of entry 415 pay? Or can I test full year plan pay against full year 415 pay? Again, most of my mid year entrants can be disaggregated but I do have a few newly match eligible that are in my test and I'm not sure what compensation I'm testing.

[ETA Consulting LLC]

415 Compensation 'automatically' satisfies 414(s). You're fine. Nowadays, documents are written to be as flexible as possible; typically stating that any definition of Compensation that satisfied 414(s) may be used for Compliance testing (and that you must use the same definition of all tests). I cannot foresee a problem unless that document, itself, prescribes and single definition of Compensation for testing purposes.

Good Luck!