Match Coverage Failure and Failsafe Language

Matching contributions fail coverage due to allocation conditions.  Plan has failsafe language.  it is FTW document.  Can you bring in participants who did not defer and give them no match because they did not defer?  Seem right based on plan language but seems wrong to bring in employees for coverage without giving them a contribution.  Thanks.

The trade-off is the bunch of extra 0% people in your ACP test possibly making that result worse.

I don't know FTW plan language. Does the "fail safe" language actually provide that you can bring in just participants who don't defer, or does it specify that you bring in participants who are employed on the last day of the plan year with the highest number of hours, then work down from there, etc.? Maybe, coincidentally, the people you are mandated to bring in to pass didn't defer? Just curious.

The 410(b) failsafe provisions in the FTW document appear in section D.6 of the adoption agreement and section 4.02(d) in the BPD.

Note that the last sentence in section 4.02 in the BPD says "Notwithstanding the foregoing, the Plan Administrator always retains the option to meet the minimum coverage requirements of Code section 410(b) by using the average benefits test of Code section 410(b)(2)."

I would try using ABT before using the provisions to adding in more participants.

If you are going to add in participants, section 4.02(d) has specific rules for who gets added in based on the election in the AA.

I always thought if you had fail safe language you COULDN'T use the ABT.

Today I learned.

Hey, who can't appreciate THAT kind of flexibility in the drafting of their document, though...