ACP testing, excluded class of employees

[Belgarath]

Suppose you have immediate eligibility for deferrals, but are in a classification (Red Sox fans) that is excluded from receiving an employer match.

The language in 1.401(m)-5  would seem to say that you are not included in the ACP test, as you are not "eligible" to receive a match. Any other opinions?

[ESOP Guy]

That has always been my understanding if you could not get a match you are not in the ACP test.  That is how I used to train people when that was my job.  The more common example is if the plan has last day language for a match those people are NOT on the ACP test. 

To note what might be obvious but you still have to pass coverage for that source. 

In fact in the extreme I noted if you allowed ONLY the HCEs to get a match you would pass the ACP test because they are the only people in the test but you would obviously fail the coverage test for that source. 

On the other hand if you limited all the NHCEs to a $1 match you would pass coverage for that source as they all benefited.  You would fail the ACP test however.  That is how I have always understood how the law stops you from getting too abusive.  Any one test allows abuse but both combined constrain you. 

[Mike Preston]

As long as you pass 410(b) without the dreaded Red Sox fans, the ACP test is determined without considering them.

[Belgarath]

Could never pass 410(b) anyway - too many Red Sox fans in the world! (And those who AREN'T Red Sox fans really want to be - they just don't dare state it publicly...)

[Lou S.]

Red Sox fans are like HCEs, you're always allowed to discriminate against them as far as I'm concerned.

That said I think Esop & Mike have the right answers.

 

[CuseFan]

I thought it was Yankees fans you were allowed to discriminate against!

The ACP test must consider everyone who would be eligible to receive a match during the year had they made an elective deferral, so Red Sox fans are excluded. As all agree.

[NJ Mike]

All the plans I draft automatically exclude Red Sox fans!!  Although, I di root for them in the world series....of 1967.   Mike