Who's in a Rate Group?

[Towanda]

Plan has 401(k), Safe Harbor Match, and Class Based Allocation for Profit Sharing.  1,000 hours and last day required to receive the Profit Sharing.

When I run rate group testing, two employees who terminated before the end of the year show up.  They both worked 1,000 hours, but they are not benefiting because they terminated their employment.

I am having a brain freeze.  If these employees are not benefiting and are receiving no employer contribution, why would they be included in the rate group testing?  Is it because they do not meet a statutory exclusion?

Thanks!

[Tom Poje]

1. Because they could defer they are included in the avg ben pct test.

2.Terminated participants who work over 500 hours are included in rate group testing as  0 (includable and not benefiting).

[Mike Preston]

So are those who work less than 500, optionally but the option is all or none. 

[Towanda]

Thank you!