Includable/excludable employees

[Guest Phil L]

A plan with age 21 and 1 year of service for making salary deferrals has a 2 year service requirement (and age 21) for profit sharing and matching contributions. No union employees in the picture.

When doing the (a)(4) test, am I correct in saying that I have to include all the employees with a year of service, even though they weren't eligible for a profit sharing contribution?

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[Guest]

for purposes of the average benefits % test, all are included.

for the rate group test, I believe only those with 2 years would be included.

if plan is top heavy, you have a different scenario, since all are receiving contributions. I think at that point you might have an option to run the rate group as either one or two tests.