Effect of Other Plans of E/er on Cross-Testing Analysis

[chris]

What effect do contributions under other plans mainained by the E/er have on determining whether a cross-tested plan is within the requirements of the Regs?? For example, assume E/er has a 401(k) plan, a new comparability PSP and a MPPP, and the E/er is obligated to make a 10% contribution under the MPPP. How does the 10% contribution under the MPPP affect the determination of the allocation percentages under the new comp. PSP?? Any suggestions??

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[Lorraine Dorsa]

You can elect to aggregate the MP and PS plans for testing purposes, or to test them separately. (Aggregating means treating them as if they were one plan such that the contributions used in the testing are the sum of the contributions in both plans [although the 401k and 401m contributions are required to be separated (called mandatory disaggregation)]).

Sometimes aggregating the 2 plans produces better results than testing the plans separately--you have to try it both ways and see which works better.

[Guest Tom Geer Daily Access Concepts]

The only limit on aggregating, other than k and m amounts, is that you can't use the 401(k) safe harbor 3% of comp as a base for aggregating with an integrated formula. Otherwise, the thought process should go as follows. First, what's my 3% cost? Second, I have $10,000 for my insiders plus 3%, so how much more do I need to get to $30,000? Then, how can I use cross-testing to get me there?