Disaggregation into 2 componant plans

[Earl]

I break a plan into 2 and both satisfy min coverage.

Plan componant 1 to be cross tested, Plan componant 2 to be allocation based tested.

When testing Plan 1 do I include participants of Plan 2 as "zeros" in the cross testing?

Maybe only in the AB%T?

Thank you

[John Feldt ERPA CPC QPA]

Is component plan #2 providing zero contribution?

Normally, plan 2 would have some allocations, and that component plan's headcounts and contributions are ignored for purposes of testing component plan #1 to see if each HCE in plan #1 has enough NHCEs in plan #1 above the midpoint. If all the HCEs in both component plans have a 70% or higher ratio, the average benefits percentage test is not required.

Otherwise, you run one average benefits percentage test for the whole plan including everyone, you do not run it for one component. There is only one concentration percentage also. You can run the AB%T on a benefits basis or on a contributions basis, and depending on whether or not the document constrains the plan, you can use any definition of 414(s) pay to test with, you can use pay from date of entry, you can use average pay of at least 3 years or longer, etc. etc.

[Earl]

Thanks. That makes sense and is very helpful. I appreciate it.

[Tom Poje]

one way of looking at it that might help

instead of thinking it as component plan testing

pretend you have 2 separate plans, one covering one group and another covering everyone else.

and you are testing on a disaggregated basis.

As John indicated, you have 1 avg ben pct test.

and then otherwise when looking at one plan, everyone else is treated as includable and not benefiting

and vice versa.

If using Relius

you run the avg ben pct test to determine if plan pass/fails

then, you code people in 2 divisions - e.g. allocation group and accrual group.

when testing the allocation group (select that divisions) and enter number of HCEs / NHCEs non benefiting non excludables from the accrual group

and do the same for the accrual group (vice versa)

make sure to answer average benefits percentage test pass or fail.

since it is Component Plan testing I guess you could name one division CP1 and the other CP2.

In fact you could actually have as many groups as you want as long as no one is in more than one.

but then if you were really crazy and set up 30 groups, the last one would be CP30..........

[Tom Poje]

and I should have added, just in, you can't split into component plans to avoid the gateway minimum

[John Feldt ERPA CPC QPA]

right, same for top heavy.