414(s) brain cramp

[Belgarath]

Cross-tested plan. Compensation for allocation purposes excludes certain items such that 414(s) testing is required. Plan requires last day/1,000 hours to receive employer contribution. Pan is NOT top heavy, nor is it a safe harbor. Question is this:

Terminated participants with more than 500 hours, so not excludable - when doing the rate group testing, for purposes of the 70% ratio test for the rate groups, do these people have to be included for purposes of 414(s) testing?  Seems like I recall that they are not included in the 414(s) test for this purpose, as they are not benefiting.  In other words, are they automatically included in the 414(s) test if you go to the average benefits test, or only if 1 or more rate groups fail the ratio test, and you must move on the the ABPT?

The plan in question passes the 414(s) with flying colors regardless, so this is more a question to avoid a future brain cramp. 

Thanks.

 

[CuseFan]

47 minutes ago, Belgarath said:

Seems like I recall that they are not included in the 414(s) test for this purpose, as they are not benefiting.

I believe that is correct.  I don't think that matters or is applicable for your general test - if you pass nondiscrimination in compensation then you can use that definition as your testing comp, I don't think you need to circle back. If your comp definition is such that you think it will pass, why not just general test using gross comp or some other safe harbor, or save steps and just do that first? Unless you have some funky large swings in excluded comp among HCEs and NHCEs screw that up.

[Belgarath]

Gracias.