Any issues to watch out for if the PS contribution is based on a participant making elective deferrals?

[jkharvey]

Cross tested plan. The allocation groups are going to be 1) Any employee who is under 59 and contributes at least 2% in deferrals will receive 2% PS contribution and 2) any employee over 59 will reeive 2% PS contribution irrespective of elective deferral.

Other than the general test, is there something wrong with this "formula"? Is it really a match? Is it BRF? Something about it just doesn't feel right.

Thanks

[Mike Preston]

It is a match. Run it by an ERISA attorney. It probably needs a bit of EPCRS.

[Tom Poje]

it is found in the regs

matching contribution are
1.401(m)-1(a)(2)(i)(B) Any Employer contribution to a defined contribution plan on account of an elective deferral

[ESOP Guy]

Strictly speaking I think you have two different types of contributions. You have a match for group one and a profit sharing contribution for group two.

So for testing you have to test them like you have two different types of contributions.

So you have to show both types of contributions are non-discriminatory and pass coverage.

It seems like some types of testing like the Average Benefits test you bring all types of contributions into the test. But I think this is a mess for testing because you have two types of contributions. There might be some combination of ACP testing and other tests that can be done to show this is legal but I doubt it is simple.

[Tom Poje]

as a result, for coverage, those in one group received a match but no nonelective and would be treated as includable and not benefiting

etc.

[ESOP Guy]

as a result, for coverage, those in one group received a match but no nonelective and would be treated as includable and not benefiting

etc.

That is my thinking when I wrote my first comment and if the HCEs happen to be in exclusively in one of the groups that will make for a testing mess.