How to do 401(k) discrimination testing for a plan with no NHCEs (i.e.

[Guest Pat Metallic]

How do you handle the discrimination testing for a plan that has only HCEs (no NHCEs)?

[davef]

I've always been of the understanding that no discrimination testing (401(a)(4), 410(B), 414(s), ADP/ACP) is required for plans with only HCEs. 415 would always be a concern, as well as top-heavy testing.

[Guest]

check out Schedule T, question 3 'exceptions'

item (a) is 'the employer employs only highly compensated employees'

thats it. check that box. you are done with your coverage test.

yes, that means you can favor certain HCEs as far as contributions are concerned.

[Guest mo again]

This is formalized in 1.401(k)-1(B)(2)(i) and 1.401(m)-1(B)(1)(ii).

[Guest mo again]

I neglected to mention that there is a parallel rule in 1.410(B)-2(B)(5).

I don't believe there is an explicit 401(a)(4) exception (although it is certainly implicit); someone let me know if you are aware of one!

[Guest Do]

Maybe I am misreading the original question, but if a PLAN covers only HCEs it does not pass discrimination.

If an EMPLOYER only employs HCEs and no HCEs at any time during the plan year, then coverage is automatically met. I believe that is the rule under the 410(B) regs and the exception listed in the Schedule T.