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Does this cross-tested plan pass??


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This 401k plan uses for a PS allocation individual groups - one group per participant.

The plan has 3 HCEs and 1 NHCE.  The desired allocation is for the owner to hit his 415 max (he makes $330,000).  But, he wants to give a lot to the others.

It just so happens that the owners PS contribution rate is 9.03%.  The other 2 HCEs and the NHCE is 28.83%.

The plan passes the non-discriminatory classification test and the average benefits test, but only on a contribution basis, not on an equivalent benefit basis.  401(a)(4) rate group passes as well.

Because of the plan's allocation method in the document, do we have to pass the average benefits test using the equivalent benefit basis, or can we rely on the contribution rate passing, even though this is a cross-tested plan?

 

Thank you 

 

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I can't *imagine* your plan document requires it to be tested for nondiscrimination solely on a benefits basis. 

Do your rate groups on an allocations basis, and all the rate groups will pass > 70%.  And then (except for the random possible exceptions which we as a pension community will remind you of in subsequent comments) you should be good.

 

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