We recently took over a 401(k) plan for a company with both collectively bargained and administrative employees. Until 2003 all employees could participate in the plan (now the union has its own plan). In previous years all eligible employees were included in the ADP test. The test failed badly each year and refunds were made. For 2003 the test would pass easily using current year data but the document specifies that look-back year data be used. Using look-back year the test fails, but of course, the 2002 test is incorrect since the CB plan was not segregated.

Is there any alternative to a correction program and rodoing all prior year tests? Has anyone had a similar problem?

Thank you!

Why arent the union employees disaggregated for 410b testing in 2002? See Reg. 1.410(b)-6(d) "union employee is always an excludible employee with respect to mandatorily disaggregated portion of any plan that benefits non union employees. "

It was done incorrectly. I guess my only option is a correction program.