Average Benefit Test - Allocations vs Accruals

[MGOAdmin]

How do you calculate the Average Benefit if you are testing the plan on both allocations and accruals. I know if you test on accural, you use the ABT for accuals, and if you test on allocation, you use the ABT for allocations, but what happens if you are passing the rate group testing by testing some on alloactions and some on accurals - what average benefit test do/can you use?

Do you have to take the ABT for the employees tested on allocations and do a seperate ABT for those testing on accurals?

Thanks for your input

[Tom Poje]

what I learned there is no requirement the Avg Ben Pct Test use the same method as a(4) (rate group testing)

ERISA Outline Book Ch 9 Section IV Part C3c agrees.

In fact, if it wasn't true, you could never do component plan testing - splitting people into two parts, testing one group on an allocation basis and another on an accrual basis. you still have 1 avg ben pct test (run on accrual or allocation basis)

[MGOAdmin]

So can you test on Accruals for the ABT and test on Allocations for the rate group testing?

[Mike Preston]

I know if you test on accural, you use the ABT for accuals, and if you test on allocation, you use the ABT for allocations....

I love it when people state what they "know" but what they know is, well, not what others know!

As Tom points out, and as your question makes clear, there is no such requirement and, if there were, it would render restructuring a meaningless concept.

What you may be confusing is the "requirement" to test a DC plan on contributions and the DB plan on benefits if you are trying to use 1.410(b)-5(e)(3) to run the ABT separately for the DC plan and the DB plan.