FAQ 473: 401a4--Terminees with less than 501 hours not in Average Benefits Percentage test


Can you figure out why the system is not including Employee A in the average benefit portion of the 401(a)(4) test? She is a terminated employee with less than 501 hours, eligible for deferrals, but excludable for profit sharing. We would expect her to be "N/A" for the rate group portion, but included in the average benefits percentage test.


The system must recognize that it is a 401(k) plan to include terminees with less than 501 hours. Check two items in the Plan Specs:
1) Is the plan coded as a "Thrift or 401(k)" Plan Type on the Benefit Limits (BENLIMIT) screen?
2) Are the source 1 specs set up with groups 34678 and 1 hour?