Chapter 5 - Average Benefit Test and Special Rules

A. Hourly paid employees

B. Salary paid employees

C. Janitors

D. Employees named Joe Smith

E. Employees working in Maryland

A. The NHCE actual benefit percentage is the average of the employee benefit percentages for each NHCE in the coverage testing group.

B. Only employees who are benefiting are considered when determining the employee benefit percentages.

C. Elective deferrals are considered employer contributions and are, thus, included when determining employee benefit percentages.

D. The employee benefit percentages may be determined based on allocation rates or benefit rates.

E. Compensation used to determine employee benefit percentages must satisfy IRC §414(s).

A. Plans must have the same plan year to be permissively aggregated.

B. A plan may not be included in more than one group of aggregated plans for coverage testing purposes.

C. A qualified plan under IRC §401(a) is not allowed to take into account a SEP to demonstrate that it passes coverage.

D. An employee must meet the minimum age and service requirements for all plans in a permissively aggregated group to be considered a nonexcludable employee.

E. Plans that are permissively aggregated for coverage must be aggregated for nondiscrimination purposes.

A. 10

B. 12

C. 20

D. 24

E. 30

A. Separate testing may be done on a year-to-year basis.

B. If the average benefit test is used for statutory employees, it must also be used for the otherwise excludable employees.

C. Employees with more than one year of service are not considered otherwise excludable employees in plans with a two-year eligibility condition, unless they are not age 21.

D. The 401(k) component of the plan may use the otherwise excludable option even if the 401(m) component of the plan does not.

E. Plans that use the otherwise excludable option for coverage purposes must also use it for nondiscrimination testing.