410b testing

[Chippy]

I have a large plan, 1600 participants, 7 companies, controlled group.    5 of the companies are eligible for a profit sharing contribution, 2 are not.    They also have a safe harbor match.   

 

Each individual company passes 410b for the profit sharing separately, but when testing together, it is failing, also fails the Average Benefits Percentage test.   

 

It appears the software is not testing separate the participants with less than 1 year of service nor is it excluding terminated participants with less than 500 hours from the companies that do not receive the profit sharing.   The software provider says it is because they are not eligible for the contribution.    Is that correct?    

any helpful hints to get this to pass? I'm just so frustrated with all the manual input 

[CuseFan]

4 hours ago, Chippy said:

Each individual company passes 410b for the profit sharing separately

Not possible, unless you mean that each would pass if they were the (only) employer, which is irrelevant. Must be the two companies not doing PS have a large contingent of the control group's NHCEs while the HCEs are concentrated in the smaller companies doing PS, which the control group coverage testing rules are designed to prohibit. Can't help you with the software issue but your description sounds like maybe the statutory exclusions are not being handled properly, whether it's the software or your coding.

[Lou S.]

As to the separate testing for participants with less than a year of service, that sounds like a software testing issue. Our system has a check box to either test all together or test statutory exclusions separately. Maybe try rewording your question to your software provider.

If you are doing general testing with ABT then I'm pretty sure you can't exclude the terminated with less than 500 from the 410(b) test.