coverage testing in a control group

Two Employers in one control group each have their own 401(k) plan. This year they wished to run ADP and ACP on a disaggregated basis. As a result of this we ran coverage testing the same way. One plan passes, plan "A",  the other just fails the 70% ratio test. I am doubtful that the ABT will pass. Let's call the failing plan "B"

Question- the employers have employees that move between the plans. If a participant ended the year in plan A and was counted in plan A's coverage test but at some time in the year was covered in plan B can that participant also be counted in plan B's coverage test for the same test year?

Aggregating the ADP/ACP would have solved the problem but the results would have hurt plan B so they did not want to re-run the test on that basis.

3 hours ago, BW said:

I am doubtful that the ABT will pass.

I'm doubtful it doesn't pass.

9 hours ago, BW said:

Aggregating the ADP/ACP would have solved the problem but the results would have hurt plan B so they did not want to re-run the test on that basis.

If aggregating solves the problem how can it hurt plan B?

It would make the ADP failure larger for that plan and they don't want to force any additional distributions. Also there are a lot of participants in the NHCE bucket that don't participate (thousands) and there is a rather large gap between accounts of the HCE's vs. NHCE which leads my concern they'll fail ABT and be forced into a large QNEC.

Regarding coverage - if a person is eligible to make a salary deferral in a plan during any part of the year they are considered benefiting under the section 401(k) portion of the plan (and also included in the ADP test). Therefore, if there were employees who transferred between A & B and were eligible to defer in each plan at some point during the year, they benefit in each plan, that is if you are looking at the full year and not doing a year-end snap-shot.