Small Controlled Group with PSP/DB plan

[Lori H]

A controlled group has maintained a PS plan for several years. They recently opened a location that they want to exclude the few employees from the PS plan. The owners no longer benefit in the PS plan either.   They recently established a DB plan where the excluded location is benefiting. The sponsor was advised of controlled group/participating employer issues. Question is...is it permissible to exclude a location(a few employees) in this situation?

[Tom Poje]

if you can pass different testing you can exclude groups

but with a DB plan you have the additional minimum participation test. if there are any HCEs in the DB plan this might be difficult

[K2]

Yes, you can exclude a location.  You have to pass coverage, and for the DB you also have to pass minimum participation.  Coverage should be easy in the PSP if you have only the owner as an HCE and he is not benefiting.  

The minimum participation standard is that at least 40% of the employees in the controlled group are covered by the DB plan. 

[Lori H]

thank you kindly for your excellent answers.