401k and 403b Sponsored

[austin3515]

§1.410(b)-7   Definition of plan and rules governing plan disaggregation and aggregation.

(f) Section 403(b) plans. In determining whether a plan satisfies section 410(b), a plan subject to section 403(b)(12)(A)(i) is disregarded. However, in determining whether a plan subject to section 403(b)(12)(A)(i) satisfied section 410(b), plans that are not subject to section 403(b)(12)(A)(i) may be taken into account.

OK, so here is my question.  the 401(k) covers all of the HCE's and the 403b covers all of the NHCE's  The first sentence above seems to suggest that I should disregard the 403b PLAN.  Perhaps what this is saying is that if I disregard the PLAN, then what I have remaining is a bunch of nonexcludable NHCE's who are not benefitting even if they all get the same employer contribution?

I want to make sure I understand what this reg is telling me I can and cannot do (I don;t actually have this scenario!).

I guess what it is also telling me is that if need the average benefits test to pass coverage for the 401k plan i have to include all of the people covered by the 403b plan as zeroes?

[Belgarath]

Without having time to really think about this, my initial quick impression (looking solely at what you have copied, in a vacuum and not looking at associated regs) is that the first sentence means when you are doing 410(b) testing on the 401(k), you disregard the 403(b) employer contributions. The second sentence means that when doing 410(b) testing on the employer contributions under the 403(b), you can take the 401(k) into account. So it appears to say the testing goes in one direction, but not the other. This seems odd, but as I said, don't have time to actually think about it, or do further research. Not sure I want to, either...maybe someone else has wrestled their way through this already!