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Posted

We're having a little trouble trying to figure this out. We have 3 separate plans for 3 different companies that are considered a controlled group. All plans have exactly the same provisions (in short they all fund a 3% safe harbor and 50% up to 6% match).

We just found out they had a 4th company that they never told us about. The 4th company has it's own plan as well. However it has different benefits. The plan has 183 employees 180 are NHCEs 3 are HCEs. 

Let's just say the 3 other plans have 1300 participants combined 300 are HCEs and 1000 are non-hces.

How do we determine what testing has to pass in order for this 4th company to stand on it's own with different benefits?

Posted

Is there a QSLOB? 

at it's most basic, the ratio percentage testing on an individual basis might pass, allowing other testing to be done individually. But you should look at benefits, rights, and features carefully. 

Are you looking for the mechanics? Assuming all are benefiting- super duper simplified. 

300 + 3 = 303 HCE

1000 + 180 = 1180 NHCE

GroupA 300/303 = 99%, 1000/1180 = 84.7%, 84.7% / 99% = 85.6% Ratio is over 70%

Company4 3/303 = 1%, 180/1180 = 15.2%, 15.2%/ 1% = 1540% Ratio is over 70%

 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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