Testing 2 Employer Plans of a Controlled Group

[Francis]

Two different employers run separate 401k plans under a controlled group and the transition rule is ending soon. Is it correct that if the plans continue to operate separately, they won't be pulled together at all for testing purposes if the plans independently pass testing on their own?

If yes, it seems both could be Safe Harbor with different matching formulas and could stay separate and pass all testing. Too good to be true?

[FORMER ESQ.]

If each of the plans independently passes 410(b) on the basis of all employees in the controlled group, then non-discrimination testing is done independently.  Keep in mind that 401(k), 401(m), and non-elective contributions are each deemed a separate "plan" for 410(b) testing. If the 410(b) testing cannot be passed as described above, then the issues become complicated.  

[Bill Presson]

Are the employers large enough to be QSLOBs?

[Francis]

Thank you. Yes, the two companies have more than 50 employees each so that appears to meet the QSLOB size requirement. I'm not familiar with QSLOBs (fairly complex at first glance) but I'll take a closer look.