Cross testing - groups identified by name

[Jakyasar]

Having a brain freeze for a change.

Checking a CB plan. No exclusions, all are included.

The 2 owners (50/50), are defined by name in their own groups i.e. group 1 - Joe Smith and group 2 - Moe Smith.

All others who are rank&file are in group 3.

Does each rate group need to pass ratio test or mid-point test is fine here?

How about if each group for the owners is written as:

Group 1: Shareholder of company - Joe smith

Group 2: Shareholder of company - Moe Smith

Thanks

[Jakyasar]

Any takers?

[CuseFan]

No exclusions, so you pass coverage 410(b) on ratio percentage.

Need to pass 401(a)(4) nondiscrimination testing your rate groups. Rate groups for that purpose are based on your NARs and MVARs, not how they are defined in the plan for allocations. Each rate group on that basis must satisfy coverage, could be ratio percentage or could be average benefits. If you need average benefits for this, then yes, you need to hit the SH/USH midpoint.

[Jakyasar]

Thanks, that was my understanding as well, passing the midpoint test i/o ratio test for each rate group (this is for 401a4 only as no issue with 410b). it is the using individual's names for each group I had a brain freeze with.

[CuseFan]

23 hours ago, Jakyasar said:

using individual's names for each group

That only creates a problem if you need to satisfy reasonable classification to satisfy 410(b) coverage using average benefits. 

[Bri]

Right, if coverage is above 70% (regardless of class formula) then all you're really testing is nondiscrimination.