Nondiscriminatory classification test

[Guest pinsall]

Nondiscriminatory classification test- 125 plan

1.Would full-time employees be considered a reasonable classification (i.e. 125 plan includes anyone eligible for medical but medical plan excludes part-timers)?

2. Who is considered benefiting,anyone who is eligible to participate in 125 plan or must it be those actually participating?

3.If the ratio % is below the unsafe harbor % does this automatically fail test or can one use a facts and circumstances approach?

It seems to me that this is a 2 prong test consisting of;

1) subjective classification test and

2)objective safe harbor test

Say 2) is met, i.e. ratio % is more than safe harbor %, when would 1) be not satisfied? Refer to question 1. above, I have an employer with a disproportionate share of part-time ees , almost 75-80% of non-highly workforce and 50% of highly workforce, but the objective safe harbor test is satisified since there are many of them , i.e, my concentration % is 96%

This question may be a mute point if part-time is a reasonable classification

I am reallly rambling now

and I thought pension coverage testing was hard, it just seems more defined I guess, making bright line testing easier.

Thanks for any input

Pat Insall, CPC