Has anyone provided benefit increases to former HCEs? The object is to provide QSERP benefits for inactives covered under a SERP. What are the issues and how should the coverage and nondiscrimination tests be conducted? The general test for DB plans for active employees deals with annual accrual rates. What about inactives (term vesteds and retirees), i.e., how do you determine their rate groups?

I'm not certain of the answer, but since you haven't had a response, the following may be helpful:

1.401(a)(4)(1)©(6) seems to say former employees are tested separately.

Then, you have 1.401(a)(4)-10 which deals exclusively with nondiscrimination with respect to former employees.

I guess that since the regulations do not provide exact rules on dealing with former employees (only that they be tested separately and most of the provisions applicable to actives apply), some discretion can be used in testing this group (determining annual accrual rates, etc.).

Thanks for your help, Andy. I didn't expect many reponses to this query as I don't think this has been done often (providing QSERP benefits to former HCEs).

Harvey (formerly ConsultingActuary)