Situation:

One plan (401(k) & P/S) with one plan sponsor and 3 participating employers (all controlled group members). Each participating employer has the right to pick P/S amount or percent for their own employees each year. Plan is top heavy. For the 1999 calendar year P/S is as follows:

Sponsor - 5%
Part Employer #1 -4%
Part Employer #2 - 6%
Part Employer #3 - Top Heavy minimum only

I know that for 410(B) and 401(a)(4) purposes, all employees in the controlled group must be included, but here is my question. When testing for 70% coverage for Part Employer #2 can I include the allocations that all other companies made even though they are less than the 6% or do the other employees show as not benefitting since they didn't receive the same 6%? On the flip side, when testing for Part Employer #1 can I inluced the other allocations even though they are more than 4%? How do top heavy minimums come into play?

Alot of maybe dumb questions but any help would be apprecieated

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I believe you can combine all employers together to test under 410(B), treating Part Employer #3 employees as not benefitting. Then, you can general test the contribution amounts. Alternatively, you can test levels of contribution as separate plans for 410(B); that is, the first plan provides 4% to Sponsor and Part Employers #1 and #2, the second plan provides 1% for Sponsor and Part Employer #2, etc. No matter how you do it, my guess is you need each employer to pass the nondiscriminatory classification test (rather than the 70% test).