Restructuring under Grouping Method

Have a Plan that uses Grouping method with two classes A and B.  Each class passes coverage individually.  The allocation method in each class is based on compensation (pro-rata).  Plan is not top heavy.

They are wanting to do a 5% allocation to Group B but not do any allocation to Group A.  As each passes coverage individually and a safe harbor base allocation (pro-rata) is used for Group B I do not see any problem - anyone have different thoughts?

Appreciate in advance.

The short answer is no (don't see any problem so don't have different thoughts).  The long answer is that one needs to be careful when determining coverage in these circumstances.  Are you passing using a 70% threshold or are you passing using the safe-harbor percentage?  Are you treating those in A who would be otherwise excludable because they terminated in the plan year with less than 500 hours as not otherwise excludable?  

Mike

Passing using the 70% threshold.  And yes to otherwise excludable although is only two out of about 40 eligible nhces in A - passes 70% either way.

I thought B was getting the allocation?

Basic question, which category of employees are in Group A vs Group B.

If one of the groups is HCEs, I don't believe you would have a problem.

11 minutes ago, thepensionmaven said:

Basic question, which category of employees are in Group A vs Group B.

If one of the groups is HCEs, I don't believe you would have a problem.

This is balderdash.  Totally inconsistent with having each group satisfy 410(b).