Different eligibility for deferral and match

[FAPInJax]

I am really rusty with respect to testing a DC plan only.

The plan has eligibility for:

Deferrals of age 18

Match and Employer of age 18, 1000 hours and 12 months

QNEC of age 18

The client is questioning whether employees eligible for deferrals but NOT eligible for the match should be excluded from 410(b) testing (both ratio percentage and average benefit percentage test).

Any help would be appreciated and thanks in advance.

[Tom Poje]

there is one and only one average benefits percentage test which includes all contribution of any type. use the least restrictive eligibility requirements - this would be no different than if you were testing a controlled group (though you could split the test into statutory includable and otherwise excludables.

there are 3 410(b) tests, so when someone asks whether they should be excluded from 410(b) testing the question doesn't make sense. which particular 410(b) test do they mean.

401(k) (deferral)

401(m) match )

nonelective (employer and QNEC)

the ratio test for these based on eligibility requirements for the particular feature, but regardless, there is still only 1 avg ben pct test based on everything.

[FAPInJax]

So each ratio test for be for the separate source of money using it's eligibility criteria. Any reason that you can think of that the coverage for the (k) and (m) would include the same people (especially knowing that I have at least one person that I can see who is not eligible for the match) - my number of HCE and NHCE participants do not change between the (k) and (m).

[Tom Poje]

if plan allowed for after tax and there was no eligibility for after tax since after tax is included in the 401m test

since you can print a report showing who is included in the testing, and you know who wasn't eligible for match you should be able to track that down 'easily'

[FAPInJax]

Thanks! Good to go