Instructions for Schedule Q (Form 5300) |
2003 Tax Year |
Specific Instructions
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Participation, Coverage,
and Nondiscrimination Requirements
Line 1.
If "Yes" is checked, attach a schedule labeled Demo 1.
Demo 1 is prepared to show how a plan that is using the qualified
separate line of business (QSLOB) rules of section 414(r) satisfies
the gateway test of section 410(b)(5)(B) or satisfies the special
rules for employer-wide plans. See Guidelines for Certain
Demonstrations on page 2.
Note.
If a request for an administrative scrutiny determination on any
separate line of business of the employer is pending with IRS, submit
a copy of the confirmation receipt issued by IRS with the application.
Line 2.
A determination letter issued for a defined benefit plan that
requests a determination regarding section 410(b) will also be a
determination regarding section 401(a)(26).
Line 3.
Determination letters generally do not provide reliance that
benefits, rights, and features under a plan satisfy the
nondiscriminatory current availability requirement of Regulations
section 1.401(a)(4)-4(b).
Answer "Yes" only if requesting a determination that any specified
benefit, right, or feature meets the nondiscriminatory current
availability requirement of Regulations section 1.401(a)(4)-4(b).
If "Yes" is checked you must provide a demonstration for each
benefit, right, and feature you wish considered. Label this attachment
Demo 3. Also see Guidelines for Certain Demonstrations on
page 2.
Line 4.
Check "Yes" and attach Demo 4 if you are requesting a determination
that the plan satisfies the average benefit test of section 410(b) or
the nondiscrimination requirements of section 401(a)(4) and for
purposes of satisfying these requirements, any of the following apply:
- The plan is disaggregated because:
- The plan includes a section 401(k) or 401(m) plan and a
portion that is not a section 401(k) or 401(m) plan,
- The plan includes an ESOP and a portion that is not an
ESOP,
- The employer applies section 410(b) separately to the
portion of the plan that benefits only employees who satisfy age and
service conditions under the plan that are lower than the greatest
minimum age and service conditions permissible under section
410(a),
- The plan benefits employees of more than one qualified
separate line of business (unless the plan is tested under the special
rule for employer-wide plans in Regulations section
1.414(r)-1(c)(2)(ii)),
- The plan benefits the noncollectively bargained employees of
more than one employer.
- The plan benefits both collectively bargained and
noncollectively bargained employees.
- The plan is permissively aggregated with another plan under
Regulations section 1.410(b)-7(d).
- The plan is restructured into component plans under
Regulations section 1.401(a)(4)-9.
See Guidelines for Certain Demonstrations on page 3.
Also, see the instructions for line 9 for additional information that
may be required in Demo 4.
Line 5.
This line is a request for a determination that the plan satisfies
the minimum coverage requirements of section 410(b) due to satisfying
the average benefit test of 1.410(b)-2(b)(5).
If a determination regarding the average benefit test is being
requested, check "Yes" and see the instructions for Demo 5 under
Guidelines for Certain Demonstrations on page 3.
This determination relates only to the satisfaction of the
requirements of section 410(b). This determination is mutually
exclusive of any determination that the plan may satisfy section
401(a)(4). If the plan must satisfy a general test in order to satisfy
section 401(a)(4), a determination that the plan satisfies the average
benefit test is not a determination that the plan's rate groups
satisfy the modified average benefit test that is included in the
general test.
Line 6.
This is exclusively a request for a determination that the plan
satisfies the nondiscrimination in amount or benefits requirements
under section 401(a)(4) of the Code using a non-design based safe
harbor or a general test. This determination is mutually exclusive of
any determination that the plan may satisfy section 410(b). A
determination that the plan satisfies the average benefit test is not
a determination that the plan's rate groups satisfy the modified
average benefit test that is included in the general test.
If this is a request for a determination regarding a non-design
based safe harbor or a general test see the instructions for Demo 6
under Guidelines for Certain Demonstrations on pages 4 and
5. The Demo 6 must show that the plan satisfies either:
- The contributions or benefits general test in Regulations
sections:
- 1.401(a)(4)-2(c),
- 1.401(a)(4)-3(c),
- 1.401(a)(4)-3(c),
- 1.401(a)(4)-8(c)(2),
- 1.401(a)(4)-8(c)(3)(iii)(C), or
- 1.401(a)(4)-9(b).
- The nondesign-based safe harbors described in Regulations
section 1.401(a)(4)-2(b)(3) (safe harbor for uniform point plans) or
Regulations section 1.401(a)(4)-3(b)(4)(i)(C)(3) (alternative safe
harbor for flat benefit plans).
Also enter one of the following letters in the space provided in
line 6 that indicates if the determination requested relates to:
A. A Defined Benefit Plan (DBP) being tested
under the general test in Regulations section 1.401(a)(4)-3(c) that
involves a facts and circumstances determination under the "safety
valve" rule in regulations section 1.401(a)(4)-3(c)(3);
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B. A plan being tested under a general test that
does not involve a determination under the safety valve rule;
or
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C. A plan intended to satisfy a nondesign-based
safe harbor.
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Line 7.
Check line 7(i) "Yes" if a determination is being requested
regarding any plan provision which provides for pre-participation or
imputed service as defined in Regulations section
1.401(a)(4)-11(d)(3)(ii). Check line 7(ii) "Yes" if a determination is
being requested for a plan amendment or, in the case of an initial
determination, a plan provision which provides for a period of past
service that exceeds the period set forth in the safe harbor in
Regulations section 1.401(a)(4)-5(a)(3).
Do not check "Yes" if past service, pre-participation service, or
imputed service is credited under the plan solely to the extent
required by one or more of the following:
- The service crediting rules under section 410(a)
(eligibility), section 411(a) (vesting), section 413 (collectively
bargained plans), or section 414(a) (service for predecessor
employer),
- The hour of service or elapsed time service-crediting
methods under 29 CFR 2530.200b-2 and Regulations section 1.410(a)-7,
and
- The prohibition on double proration of service and
compensation in 29 CFR section 2530.204-2(d).
If "Yes" is checked, attach a schedule label Demo 7. See the
instructions for Demo 7 under Guidelines for Certain
Demonstrations on page 5.
Line 8.
Check "Yes" if a determination is being requested for a plan that
is part of a floor arrangement. If “ Yes” is checked, attach a
schedule labeled Demo 8. See the instructions for Demo 8 under
Guidelines for Certain Demonstrations on page 5.
Nondiscriminatory Compensation and Employee Contributions
Line 9.
Check “ Yes” if a determination is being requested where:
a.
The plan bases contributions or benefits on a definition of
compensation that does not satisfy the requirements of Regulations
section 1.414(s)-1(c)(2) or (3); or
b.
The plan includes a section 401(k) and/or section 401(m) plan that
incorporates an actual deferral percentage or actual contribution
percentage test using a definition of compensation that does not
satisfy the requirements of Regulations sections 1.414(s)-1(c)(2) or
(3).
If this plan has been disaggregated into separate plans or
restructured into component plans, this line may be checked “ Yes”
to request a determination if any of the separate disaggregated plans
or restructured component plans are described in a or
b above. Also complete a Demo 4 and indicate on the Demo 4
each disaggregated plan or component plan to which a or
b applies.
Note:
Section 401(k) and 401(m) plans may not be restructured.
Attach Demo 9 if you checked “ Yes” and see the instructions
for Demo 9 under Guidelines for Certain Demonstrations on
page 5.
Line 10.
Check “ Yes” if this is a defined benefit plan and a
determination is being requested regarding employee contributions not
allocated to separate accounts.
Line 11.
Enter the letter shown on the form that corresponds to the method
that is being used to determine the employer-provided benefit for
purposes of Regulations section 1.401(a)(4)-6(b).
Note:
The composition-of-workforce and minimum benefit methods may only
be used with plans that satisfy the unit credit safe harbor in
Regulations section 1.401(a)(4)-3(b)(3).
If you enter the letter “ A,” attach a Demo 10. See the
instructions for Demo 10 under Guidelines for Certain
Demonstrations on page 5. If applicable, also indicate the plan
factor.
Line 12.
Enter the letter that corresponds to the method used to show that
the employee-provided benefit is nondiscriminatory in amount. See
Regulations section 1.401(a)(4)-6(c).
If you enter the letter “ C,” attach a Demo 11, if applicable.
See the instructions for Demo 11 under Guidelines for Certain
Demonstrations on page 5.
Guidelines For Certain Demonstrations
The following instructions describe additional information that
must be included in the demonstrations.
Note:
Applicants must follow the guidelines in these instructions and
indicate in their demonstrations where the elements in the guidelines
are addressed. Applicants must explain why any elements have not been
addressed.
Information or computations that are used for more than one purpose
or provided elsewhere in the application may not be cross-referenced.
Demo 1 – Qualified Separate Lines of Business
Provide a schedule with the following information, as applicable:
1.
The Code section(s) for which the employer is testing on a separate
line of business basis (i.e., section 410(b) or section 401(a)(26)),
2.
The separate lines of business that have employees benefiting under
the plan,
3.
A demonstration of how the plan meets the nondiscriminatory
classification requirement of section 410(b)(5)(B) and Regulations
section 1.414(r)-8(b)(2) on an employer-wide basis, and
4.
If the requirements of section 410(b) or section 401(a)(26) are to
be applied to this plan on an employer-wide basis under the special
rules for employer-wide plans, a demonstration of how the plan meets
the requirements of the applicable special rule in Regulations
sections 1.414(r)-1(c)(2)(ii) or 1.414(r)-1(c)(3)(ii).
A Demonstration is not required. See explanation for line 2 on the
Schedule Q (Form 5300).
Demo 3 – Nondiscriminatory Current Availability Of
Benefits, Rights And Features
1.
An applicant requesting a determination that a plan satisfies the
nondiscriminatory current availability requirement of Regulations
section 1.401(a)(4)-4(b) for any benefit, right, or feature ("BRF")
specified by the applicant should ordinarily demonstrate the following
for each BRF that the applicant wants considered:
a.
Identify the specific BRF, including terms pertaining to the BRF,
such as eligibility conditions, timing, election rights, etc.
b.
Cite the plan provisions that describe the BRF and all terms
relating to the BRF.
c.
Describe any conditions on the availability of the BRF that were
disregarded in determining current availability.
d.
If the BRF is contingent on an unpredictable event, describe the
contingency and determine current availability as if the event had
occurred.
e.
If applicable, describe how the special rule in Regulations section
1.401(a)(4)-4(d)(3), relating to early retirement window benefits, has
been applied.
2.
If the BRF is an optional form of benefit, ancillary benefit, or
other right or feature that has been aggregated, for testing purposes,
with another optional form of benefit, ancillary benefit, or other
right or feature, respectively, show how the requirements of
Regulations section 1.401(a)(4)-4(d)(4)(i)(A) and (B) are satisfied.
3.
Describe the group of employees to whom the BRF is available and
indicate if this group includes any nonexcludable employees with
accrued benefits who are not currently benefiting ("frozen plan
participants").
4.
Demonstrate one of the following with respect to the specified BRF:
a.
The group of employees to whom the benefit is currently available
satisfies the section 410(b) ratio percentage test.
b.
The BRF has been prospectively eliminated and satisfies the section
410(b) ratio percentage test as of the elimination date.
c.
The BRF is available only to an acquired group of employees and the
requirements of Regulations sections 1.401(a)(4)-4(d)(1)(i)(A) and (B)
are satisfied.
d.
The plan is a permissively aggregated plan and the BRF is a spousal
benefit described in Regulations section 1.401(a)(4)-4(d)(5).
e.
The plan is an ESOP and the BRF is an investment diversification
right or feature or distribution option available only to all
qualified participants (as defined in section 401(a)(28)(B)(iii)) or
the failure of the BRF to satisfy current availability results solely
from the restrictions of section 409(n).
f.
The plan is a permissively aggregated defined benefit/defined
contribution (DB/DC) plan; the BRF is not a single sum benefit, loan,
ancillary benefit, or benefit commencement date (including the
availability of in-service withdrawals); the BRF is provided under
only one type of plan; and the BRF is currently available to all NHCEs
in all plans of the same type as the plan under which it is provided.
5.
If the BRF is available to frozen plan participants, show how one
of the requirements in Regulations sections 1.401(a)(4)-4(d)(2)(i)
through (iv) is satisfied.
Demo 4 – Test for Restructuring, Mandatory
Disaggregation or Permissive Aggregation
Explain the basis of the disaggregation, permissive aggregation, or
restructuring, identifying the aggregated or separate disaggregated
plans or component plans, and demonstrate how any restructured
component plans satisfy section 410(b) as if they were separate plans.
Any other plan that has been permissively aggregated with this plan
should be identified by:
- Name,
- Plan number, and
- Employer Identification Number (EIN).
Describe the benefit or allocation formula of the other plan and
indicate if that plan has received or applied for a determination
letter.
Demo 5 – Average Benefit Test
1.
An applicant requesting a determination that a plan satisfies the
average benefit test must demonstrate compliance with the
nondiscriminatory classification test of Regulations section 1.410(b)
including, if applicable, the facts and circumstances determination
under Regulations section 1.410(b)-4(c)(3).
Note.
The determination regarding the average benefit test is not
available to a plan that satisfies the ratio percentage test.
The demonstration for the average benefit test should provide, for
each Highly Compensated Employee (HCE) and each Non-Highly Compensated
Employee (NHCE) the compensation used in the test, the allocation or
benefit being tested and the actual benefit percentages. The average
benefit percentages for HCEs and NHCEs must be provided.
2.
A plan that is deemed to satisfy the average benefit percentage
test under the special rule in Regulations section 1.410(b)-5(f) must
demonstrate that the plan would satisfy the ratio percentage test if
the excludable employee and mandatory disaggregation rules for
collectively bargained and noncollectively bargained employees did not
apply.
3.
In addition to the above information, the average benefit
percentage demonstration must identify and describe the method used
for determining employee benefit percentages (see Regulations sections
1.410(b)-5(d) and (e)), include the information listed below, under
the heading All Plans, as applicable.
Note.
The demonstration must include the portion of the coverage test
showing the data used in the calculations and the calculations for
each participant. Participants need not be identified. However, the
IRS may request that additional information be submitted if necessary.
All plans using the average benefit test must also include the
following information on Demo 5:
1.
The testing period (see Regulations section 1.410(b)-5(e)(5) for an
optional averaging rule).
2.
The definition of testing service (including imputed and
pre-participation service).
3.
A description of the testing group (see Regulations section
1.410(b)-7(e)).
4.
Whether the employee benefit percentages are determined on a
contributions or benefits basis.
5.
Whether permitted disparity under Regulations section 1.401(a)(4)-7
is imputed in determining employee benefit percentages.
6.
A explanation of how allocation or accrual rates are grouped on the
test.
7.
A description of how contributions or benefits are normalized,
including actuarial assumptions used.
8.
The definition of section 414(s) compensation used in determining
plan year compensation or average annual compensation and a
demonstration showing the definition as nondiscriminatory. If plan
year compensation or average annual compensation is determined using a
definition of compensation that satisfies Regulations section
1.414(s)-1(c)(2) or (3) the explanation should state whether the
definition satisfies section 1.414(s)-1(c)(2) or (3). For guidance
pertaining to this demonstration, see the guidelines under the Demo 9
instructions on page 5 pertaining to nondiscriminatory compensation.
9.
A description of the method of determining compensation used in
determining employee benefit percentages.
10.
The testing age of employees (not applicable to defined
contribution plans testing on a contribution basis).
Plans with Defined Benefit Plans
in the Testing Group
Plans with DBP's in the testing group must also provide the
following information if applicable.
11.
Show if accruals after normal retirement age are taken into account
and, if such accruals are disregarded as provided in Regulations
section 1.401(a)(4)-3(f)(3), the basis on which they are disregarded.
12.
Show if most valuable rates must be used under Regulations section
1.410(b)-5(d)(7), and, if so, show how those rates are determined.
13.
Show if a defined benefit plan disregards offsets described in
Regulations section 1.401(a)(4)-3(f)(9), give a description of such
offsets, and show how they satisfy Regulations section
1.401(a)(4)-3(f)(9).
14.
Show if any disability benefits are taken into account in
determining employees' accrued benefits under Regulations section
1.401(a)(9)-3(f)(2), and, if so, cite the plan provisions that permit
these disability benefits to be taken into account.
15.
Show if any other special rules in testing a plan for
nondiscrimination in amounts are applied, e.g., the rules applicable
to the determination of benefits on other than a plan-year basis
described in Regulations section 1.401(a)(4)-3(f)(6), the adjustments
for certain plan distributions provided in Regulations section
1.401(a)(4)-3(f)(7), and the adjustment for certain qualified
preretirement survivor annuity charges as provided in Regulations
section 1.401(a)(4)-3(f)(8).
16.
Plans with employee contributions not allocated to separate
accounts: give a description of the method for determining the
employer-provided accrued benefit under Regulations section
1.401(a)(4)-6(b) and the location of relevant plan provisions. If the
method for determining the employer-provided accrued benefit is the
composition-of-workforce method, the demonstration must show that the
eligibility requirements of Regulations section
1.401(a)(4)-6(b)(2)(ii) are satisfied; if the grandfather rule of
Regulations section 1.401(a)(4)-6(b)(4) is used, the demonstration
must show, if applicable, that the benefits provided on account of
employee contributions at lower levels of compensation are comparable
to those provided on account of employee contributions at higher
levels of compensation.
Employee Benefit Percentages Determined Using Cross-Testing
17.
Provide a description of the method used to determine equivalent
allocations and benefits.
A request for a determination that a plan satisfies any of the
general tests in Regulations sections
- 1.401(a)(4)-2(c),
- 1.401(a)(4)-3(c),
- 1.401(a)(4)-8(b)(2),
- 1.401(a)(4)-8(c)(2),
- 1.401(a)(4)-8(c)(3)(iii)(C), or
- 1.401(a)(4)-9(b)
must include a nondiscrimination test showing that the plan
passes the relevant general test, and provide the information listed
under All Plans (unless otherwise noted), and if
applicable, under Defined Benefit Plans Only or
Cross-Tested Plans Only. However, the IRS may request that
additional information be submitted if necessary.
All Plans (unless otherwise noted)
All plans must submit the information requested in items 1 through
11 (below).
1.
Provide the portion of the nondiscrimination test that provides the
data for each participant and demonstrates that the plan satisfies
401(a)(4). Participants need not be identified by name. Tests that
include two or more component plans (such as profit-sharing, money
purchase, 401(k) and 401(m)) should show the allocations or benefits
under each component plan.
2.
Identify each rate group under the plan and include a demonstration
of how each rate group satisfies section 410(b). If the plan is a DBP
that is being tested on the basis of the amount of benefits, rate
groups must be determined on the basis of both normal and most
valuable accrual rates which are expressed as a dollar amount or a
percentage of compensation. If the most valuable accrual rate is
determined in accordance with the special rule in Regulations section
1.401(a)(4)-3(d)(3)(iv) (floor on most valuable accrual rate), this
must be indicated.
3.
State whether the plan is being tested on a contributions or
benefits basis.
4.
Provide the plan year being tested.
5.
Provide a description of the method of determining allocation or
accrual rates, and if the plan is tested on a benefits basis, the
measurement period and definition of testing service (including
imputed and pre-participation service).
6.
State whether the test is imputing permitted disparity under
Regulations section 1.401(a)(4)-7.
7.
Provide an explanation of how allocation or accrual rates are
grouped.
8.
Provide an explanation of how benefits are normalized on the test,
including the actuarial assumptions used (not applicable to defined
contribution plans testing on a contributions basis).
9.
State the definition of section 414(s) compensation used in
determining plan year compensation or average annual compensation and
a demonstration showing the definition as nondiscriminatory. If plan
year compensation or average annual compensation is determined using a
definition of compensation that satisfies Regulations sections
1.414(s)-1(c)(2) or (3) state whether the definition satisfies
1.414(s)-1(c)(2) or whether the definition satisfies 1.414(s)-1(c)(3).
See the guidelines under the Demo 9 instructions pertaining to
nondiscriminatory compensation for guidance pertaining to this
demonstration.
10.
Provide the method of determining average annual compensation used
in testing the plan for nondiscrimination as defined in Regulations
section 1.401(a)(4)-3(e)(2) or give a description of the period used
in determining plan year compensation.
11.
Provide the testing age of employees, include fractions of year if
test is based on fractional age (not applicable to a Defined
Contribution Plan (DCP) testing on a contributions basis).
Defined Benefit Plans Only
All DBP's must also provide the following information if
applicable:
12.
State whether accruals after normal retirement age are taken into
account, and if such accruals are disregarded as provided in
Regulations section 1.401(a) (4)-3(f)(3), provide the basis on which
they are disregarded.
13.
State whether early retirement window benefits are taken into
account in determining accrual rates and whether such benefits are
being disregarded under Regulations section 1.401(a)(4)-3(f)(4)(ii).
Also provide the basis on which they are disregarded.
14.
State whether any unpredictable contingent event benefits were
taken into account in determining accrual rates under Regulations
section 1.401(a)(4)-3(f)(5) and provide the basis on which they are
taken into account.
15.
State whether the plan disregards offsets described in Regulations
section 1.401(a)(4)-3(f)(9), provide a description of such offsets,
and show how they satisfy Regulations section 1.401(a)(4)-3(f)(9).
16.
State whether any disability benefits are taken into account in
determining employees' accrued benefits under Regulations section
1.401(a)(4)-3(f)(2), and if so, cite the plan provisions that permit
these disability benefits to be taken into account.
17.
State whether any other special rules in Regulations section
1.401(a)(4)-3(f) are applied in testing a plan for nondiscrimination
in amount, for example:
- The rules applicable to the determination of benefits on
other than a plan-year basis described in Regulations section
1.401(a)(4)-3(f)(6),
- The adjustment for certain plan distributions provided in
Regulations section 1.401(a)(4)-3(f)(7), and
- The adjustment for certain qualified preretirement survivor
annuity charges as provided in Regulations section
1.401(a)(4)-3(f)(8).
18.
Plans with employee contributions not allocated to separate
accounts should include:
- A description of the method for determining whether
employee-provided accrued benefits are nondiscriminatory under
Regulations section 1.401(a)(4)-6(c),
- The method for determining the employer-provided accrued
benefit under Regulations section 1.401(a)(4)-6(b), and
- The location of relevant plan provisions.
If the method for determining the employer-provided accrued benefit
is the composition-of-workforce method, the demonstration must show
that the eligibility requirements of Regulations section
1.401(a)(4)-6(b)(2)(ii) are satisfied.
If the grandfather rule of Regulations section 1.401(a)(4)-6(b)(4)
is used, the demonstration must show, if applicable, that the benefits
provided on account of employee contributions at lower levels of
compensation are comparable to those provided on account of employee
contributions at higher levels of compensation
19.
If the plan would otherwise fail to satisfy the general test in
Regulations section 1.401(a)(4)-3(c)(1), and a determination is being
sought that the failure may be disregarded as permitted by the special
rule in Regulations section 1.401(a)(4)-3(c)(3), describe the relevant
facts and circumstances that support the use of this rule.
20.
Provide a description of the method used to determine equivalent
allocations and benefits.
21.
For defined contribution plans, the demonstration must list each
participant's allocation rate for the plan being tested and list the
equivalent benefit accrual rate (including component plans) for each
participant.
Demo 6 – Safe Harbor for Uniform Points Plans
Each demonstration of the safe harbor for uniform points plans in
Regulations section 1.401(a)(4)-2(b)(3) should include the following
information:
1.
Provide a description of the plan's allocation formula and the
location of relevant plan provisions.
2.
State the definition of section 414(s) compensation used in
determining plan year compensation and give a demonstration showing
the definition as nondiscriminatory. If the plan determines plan year
compensation using a definition of compensation that satisfies
Regulations section 1.414(s)-1(c)(2) or (3), state whether the
definition satisfies 1.414(s)-1(c)(2) or (3).
See the guidelines in Demo 9 below pertaining to nondiscriminatory
compensation for guidance pertaining to this demonstration.
3.
Provide the portion of the nondiscrimination test that provides the
data for each participant and demonstrates that the plan satisfies
401(a)(4). The data must include the units for each participant being
tested and the underlying basis for the units such as age, years of
service, or compensation. Show the allocation rate for each eligible
participant. Show the average of the allocation rates (determined
without imputing permitted disparity) for the highly compensated and
for the nonhighly compensated employees benefiting under the plan.
Demo 6 – Alternative Safe Harbor for Flat Benefit Plans
Each demonstration of the alternative safe harbor for flat benefit
plans in Regulations section 1.401(a)(4)-3(b)(4)(i)(C)(3) must set
forth the average of the normal accrual rates for all nonhighly
compensated nonexcludable employees and the average of the normal
accrual rates for all highly compensated nonexcludable employees. In
addition, the demonstration should provide the additional information
described under Demo 6–General Test, relating to the
determination of normal accrual rates, except for the information
described in paragraphs numbered 1, 2, 6, 18, and 19.
Demo 7 – Test for Pre-participation or Imputed Service
If a determination is being requested, attach a schedule that
includes the following:
1.
A description of the nature of the grant of past service or
pre-participation or imputed service,
2.
The location of the various plan provisions that provide for the
granting of the service, and
3.
In the case of pre-participation or imputed service, state if the
service is being taken into account in determining if the plan
satisfies Regulations section 1.401(a)(4)-1(b)(2).
Demo 8 – Test for Floor Offset Arrangement
If a determination is being requested, attach a statement giving
the name, EIN, and plan type (e.g., defined benefit or profit-sharing)
of the other plan that is part of the arrangement.
Also indicate if the other plan has received a favorable
determination letter or is requesting a determination letter
simultaneously with this application.
Demo 9 – Nondiscriminatory Compensation
If a determination is being requested, a demonstration that a
definition of compensation is nondiscriminatory under the test in
Regulations section 1.414(s)-1(d) should include the following
information:
1.
It should state if the demonstration relates to a definition used
to determine contributions or benefits, or a definition used in a
section 401(k) and/or section 401(m) plan's ADP and/or ACP test.
2.
It should state the definition of compensation being tested (and
cite the plan provision where applicable), and indicate whether the
definition uses rate of compensation or includes prior-employer
compensation or imputed compensation.
3.
It should identify the period for which compensation data is given.
4.
It should state whether the test is based on the compensation of
all employees benefiting under the plan or all employees benefiting
under all plans of the employer for which the same alternative
definition of compensation is used to determine that the plan
satisfies section 401(a)(4). It should also state whether all
employees with zero total compensation have been excluded from the
test. The demonstration should state the numbers of HCEs and NHCEs
whose compensation is taken into account in the demonstration.
5.
For both the highly compensated and nonhighly compensated groups of
employees, it should state whether the test uses an aggregate,
individual, or other reasonable method to calculate inclusion
percentages. If an “ other” method is used, this should be
described.
6.
With regard to the determination of total compensation and
compensation included under the definition being tested, the
demonstration should:
a.
Specify the section 415(c)(3) definition of compensation used in
determining total compensation;
b.
Indicate if total compensation includes elective contributions and
deferred compensation and, if applicable, if and how the adjustment
required by Regulations section 1.414(s)-1(d)(3)(ii)(B) has been made;
and
c.
State if, for purposes of the test, compensation included under the
definition being tested is limited to total compensation and if both
total compensation and compensation included under the definition
being tested are limited to amounts not in excess of the limit in
section 401(a)(17).
7.
The demonstration should show, for both groups of employees, the
respective inclusion percentages, and also describe the manner in
which such inclusion percentages are determined.
8.
Finally, if the HCEs inclusion percentage is greater than the NHCEs
inclusion percentage, the demonstration should set forth any facts
relevant to whether the difference is de minimis.
Demo 10 – Employer-Provided Benefit Method
If a determination is being requested attach a demonstration
showing that the eligibility requirements of Regulations section
1.401(a)(4)-6(b)(2)(ii) are satisfied. If applicable, also indicate
the plan factor.
Demo 11 – Test to Show Employer-Provided Benefit is
Nondiscriminatory in Amount
If a determination is being requested attach a demonstration, if
applicable, that the benefits provided on account of employee
contributions at lower levels of compensation are comparable to those
provided on account of employee contributions at higher levels of
compensation, as required by Regulations section
1.401(a)(4)-6(c)(4)(ii)(D).
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