Facts: 401k Plan has ability to allow profit sharing, match and deferral. 2002 contributions consist solely of deferrals. Profit sharing has last day rule restriction but match does not.

Interpretation: The instructions for Sch T Line 3 seem to indicate that box 3b (no HCE's benefit - profit sharing piece) and box 3d (all non excludables benefit - deferral and match pieces) should both be checked and then line 4 should be left completely blank.

Question: Is the interpretation correct? I'm being told by another practitioner that what I should do is leave line 3 blank and fill out line 4e (name the disaggregated part, leave the ratio percentage column blank, and fill in the appropriate exception code).

Either method is simple, but what does the DOL want? Thank you for any help!

RS Vatalaro,
For purposes of clarification....
you said that all contributions were deferrals. So were there no matching contributions nor profit-sharing contributions for the year?

You're correct - no match or profit sharing to be contributed for 2002 calendar plan year.

I interpret the rules as you do, except if no match was given, then no HCE's benefit for that piece as well. (You would still be left checking 2 boxes on line 3.)

Technically if an employee is elgible to receive an employer match, regardless of whether one is made, they are treated as benefiting for purposes of 410(B), so the option to check off "No HCE's benefiting" should not be applied to the match portion.

I come to the same conclusion (same two boxes checked), but different application to disaggregated portions.

Reg 1.410(B)-3(a)(2)(i) - Exceptions to allocation or accrual requirements.

As long as an employee is an eligible employee under 1.401(m)-1(f)(4) they are considered benefiting for purposes of 410(B) testing. If they are eligible to defer and there are no other requirements to receive a match, they are considered benefiting, regardless of whether they defer to the plan or not.