controlled group ADP testing

[K2retire]

I've been asked to help interpret an ADP test done by someone else - always a potentially scary thing - and predict how much the HCEs can defer in 2016. The plan covers about 20 companies that are part of a controlled group. Overall, the test appears to me to fail with an HCE ADP of 1.43% and an NHCE rate of 0.57%.

The bundled service provider is saying it passes by using disaggregation. I initially thought they were referring to disaggregating the otherwise excludables. Looking at the actual test, it appears that they are disaggregating by geographic location or possibly by job title (not enough information to tell for sure) in addition to excludable and non-excludable categories. The test shows Group A excludable, Group A non-excludable, Group B excludable, Group B non-excludable, etc. Each group passes.

I thought the point of the controlled group rules was to require combined testing of the related companies. Is there some rule that I've forgotten about that allows this sort of disaggregation?

[Lou S.]

Is it one plan or does each company have it's own plan?

[K2retire]

One plan.

[Lou S.]

I've never heard of disaggregating a 401(k) test by group, division, location etc. inside a single 401(k) plan.

[BG5150]

Can you do component plans for 401(k)/(m) testing? Or is that just a(4)?

[Doghouse]

Restructuring for ADP and ACP went bye-bye with the issuance of 401(k) regulations in 1991.

[K2retire]

Restructuring for ADP and ACP went bye-bye with the issuance of 401(k) regulations in 1991.

And since I started in this business in 1999, that explains why I don't remember it!

[buckaroo]

Are you sure that all members are part of a single controlled group/affiliated service group? Or could it be a multiple employer plan? If it is a multiple employer plan, it should be tested separately for each unrelated member. (Related members should be tested together.)

[K2retire]

The document doesn't mention anything about being a multiple employer plan.

And since I know this company has some union employees, I also checked to be sure that union employees are excluded.

[BG5150]

QSLOB?