ADP test(s) for control group

[Richard Anderson]

Two corporations (A and b) form a brother-sister control group. Each corporation has a 401(k) plan that benefits only it's employees. Each plan is identical. Each plan has the same employer contribution rates. Each plan will pass 410(B) on it's own or aggregated.

Must the plans be aggregated for the ADP test or may they be tested separately. If they may be tested separately, are only the employees of Corp A in the ADP test of Corp A.

[Tom Poje]

yes, no, maybe so.

It depends on how you treat the plans for coverage.

Obviously for coverage, I have to count all employees as being employed by one employer. (IRC 414(B) and ©). This determines my body count for the denominator.

Now, are you going to permissively aggregate the plans for coverage? If you do, then you must aggregate for the ADP test as well.

If you do not permissively aggregate for coverage, then you only include Plan A bodies in Plan A's ADP test and Plan B bodies in Plan B's test. Thats because the ADP test only includes ees actually eligible to defer. Or perhaps it is easier to think of it in regards to the ACP test - you exclude those bodies who couldn't get a match either because of hours or last day.

all this, of course effects what you put on your schedule T as well.

hope all is going well! long time no see!

[Guest crosseyetester]

I understand that a top 20% election applies to all plans sponsored by an employer. Does it also apply to all plans within a control group? If so, would all participants be combined to determine who the top 20% HCE's are? Then, the individual plans may not permissively aggregated so that each runs its own tests, based on the HCE determination from the group as a whole. Does that make sense?

[Mike Preston]

Yup.

[austin3515]

Thankfully, that ridiculous schedule T is no longer required