Controlled Group Different Plan Year

[pixmax]

We work on a plan that is a controlled group. Out of the 3 groups we administer two and another TPA takes care of the 3rd Plan. Not a problem, however they acquired another group (4) that has a different Plan Year. We are contracted to take care of the coverage testing for all 4 groups. How do we handle the off calendar plan?

[Tom Poje]

good luck!

the regs say:
1.410(b)-7(d)(5)
Two or more plans may not be aggregated and treated as a single plan unless they have the same plan year

so for coverage you are not permitted to permissively aggregate
so, for example, when looking at the non calendar year plan, everyone else in includable and not benefitting (assuming they have otherwise met eligibility, of course)

of course if you aggregate for coverage you would aggregate for nondiscrim testing (e.g. ADP or ACP) and I think that must be one of the reasons why you can't aggregate plans with different plan years. what comps would you use, how would you handle terminees, etc.

the exception is the avg ben pct test which includes everything (hopefully you wouldn't need to run this - gives me a headache thinking about it):
1.410(b)-5(ii)
(ii) Plans with differing plan years. If not all the plans in the testing group share the same plan year, § 1.410(b)-7(d)(5) would ordinarily prohibit them from being aggregated for purposes of section 410(b). In such a case, employee benefit percentages are determined by applying the rules of paragraph (d)(5)(i) of this section separately to each subset of plans in the testing group that share the same plan year (or the same accrual computation period) and aggregating the results for all plans in the testing group. Thus, an employee's employee benefit percentage is determined as the sum of these separate employee benefit percentages that are determined consistently for all the plans in the testing group (except for differences attributable solely to the differences in plan years).

[chc93]

In a similar situation that we had, the plan year for the "new" plan was amended to coincide with the existing plans. This was after we found out about the "new" plan, but was amended prior to the start of the current plan year for the existing plans.

[pixmax]

We actually don't want to aggregate and have to perform the AVBT. One of the plans changed to a safe harbor provision without consulting us. They are with another TPA.

[pixmax]

So, if I have 3 plans ending 6/30/16 and the other plan ended 12/31/2015. I would use 1/1/2015-12/31/2015 compensation for the plan that does not have the same plan year? These would both be considered 2015 Plan Year. Or do I use 12/31/16 compensation? Plan years ending in the same plan year.

[Tom Poje]

some of this stuff you really have to hunt down....

1.410(b)-5(d)(3)(ii)

.....on the basis of plan years ending with or within the same calendar year

(but you knew that and was checking to see if I remembered, which I didn't but had to look up again)