Does compensation have to be full year for Average Benefit Percentage

[John A]

For the Average Benefit Percentage Test under coverage testing of 410(B), what compensation must be used? I believe 414(s) compensation must be used, and I know the plan document may control this. However, if the plan document is silent, is there a choice between full year and partial year? Can the same compensation used for ADP and/or ACP testing be used for the Average Benefit Percentage Test?

[Guest]

I find it hard to believe plan document is silent - no, wait, I have read some awful documents....

If allocation was based on comp from date of participation, I would have no problem using that as my testing comp.It sounds like that is what you are using for ADP testing, and ADP testing is suppose to use 414(s) comp, so maybe you've answered your own question. comp from date of participation is a def of 414(s) comp.

[John A]

Thanks, Tom. After some additional research, I came to the conclusion that I could use comp. while eligible since that is allowed in 1.401(a)(4)-12.