ADP testing in controlled group

[Guest hb95]

Owner of Company A purchased 100% of Company B creating a controlled group. Both companies have their own separate 401(k) plans. Can Company A do ADP testing for its 401(k) plan separately from Company B's 401(k) plan?

I seem to recall some guidance or a regulation that permits separate ADP testing, but cannot locate it.

Thanks.

[Jim Chad]

If they pass coverage separately, then you can do discrimination testing separately.

[Guest hb95]

Thanks, that's what I thought. Are there regulations that support this position?

[Tom Poje]

the last line of 1.410(b)-7(d)

"Well, I'm back"..oh wait that's the last line of Lord of the Rings.

um...

If an employer treats two or more separate plans as a single plan under this paragraph, the plans MUST be treated as a single plan for all purposes under section 401(a)(4) and 410(b)

[Guest hb95]

A follow-up question:

What rules would apply relating to coverage and/or nondiscrimination testing if the two separate plans in the controlled group have different eligibility (age and service) requirements?

[Tom Poje]

if you implement the 'otherwise excludable option' then it is probably a moot point.

if you don't go that route, then you use the least stringent eligibility, but I don't have the cite on the tip of my tongue