Treasury Regulations (26 C.F.R.)
26 CFR § 1.401(a)(26)-7
Testing methods.
# (a) Testing on each day of the plan year.
A plan satisfies section 401(a)(26) for a plan year only if the plan satisfies section 401(a)(26) on each day of the plan year. An employee benefits on a day if the employee is a participant for such day and the employee benefits under the plan for the year under the rules in § 1.401(a)(26)-5.
# (b) Simplified testing method.
A plan is treated as satisfying the requirements of paragraph (a) of this section if it satisfies section 401(a)(26) on any single plan day during the plan year, but only if that day is reasonably representative of the employer's workforce and the plan's coverage. A plan does not have to be tested on the same day each plan year.
# (c) Retroactive correction.
If a plan fails to satisfy section 401(a)(26) for a plan year, the plan may be retroactively amended during the same period and under the same conditions as provided for in § 1.401(a)(4)-11(g)(3) through (g)(5) to satisfy section 401(a)(26). A plan merger that occurs by the end of the period provided in § l.401(a)(4)-11(g)(3)(iv) is treated solely for purposes of section 401(a)(26) as if it were effective as of the first day of the plan year. The rule of this paragraph (c) may be illustrated by the following example.
Example.
Assume that an employer with 500 employees maintains two defined contribution plans. Plan A benefits 45 employees. Plan B benefits 50 employees. Immediately before the end of the period provided for in § 1.401(a)(4)-11(g)(3)(iv), the employer expands coverage under Plan A to benefit 20 more employees retroactively for the plan year. Thus, Plan A satisfies paragraph (a) of this section for the plan year. Alternatively, before the end of the period provided for in § 1.401(a)(4)-11(g)(3)(iv), or later if a later period is applicable under section 401(b), the employer could merge Plan A with Plan B to satisfy section 401(a)(26).
[T.D. 8375, 56 FR 63418, Dec. 4, 1991]
Source: view the official text
In this part (40 sections)
- 1.401(a)(4)-13 · Effective dates and fresh-start rules.
- 1.401(a)(5)-1 · Special rules relating to nondiscrimination…
- 1.401(a)(9)-0 · Required minimum distributions; table of contents.
- 1.401(a)(9)-1 · Minimum distribution requirement in general.
- 1.401(a)(9)-2 · Distributions commencing during an employee's lifetime.
- 1.401(a)(9)-3 · Death before required beginning date.
- 1.401(a)(9)-4 · Determination of the designated beneficiary.
- 1.401(a)(9)-5 · Required minimum distributions from defined…
- 1.401(a)(9)-6 · Required minimum distributions for defined benefit…
- 1.401(a)(9)-7 · Rollovers and transfers.
- 1.401(a)(9)-8 · Special rules.
- 1.401(a)(9)-9 · Life expectancy and Uniform Lifetime tables.
- 1.401(a)(17)-1 · Limitation on annual compensation.
- 1.401(a)(26)-0 · Table of contents.
- 1.401(a)(26)-1 · Minimum participation requirements.
- 1.401(a)(26)-2 · Minimum participation rule.
- 1.401(a)(26)-3 · Rules applicable to a defined benefit plan's prior…
- 1.401(a)(26)-4 · Testing former employees.
- 1.401(a)(26)-5 · Employees who benefit under a plan.
- 1.401(a)(26)-6 · Excludable employees.
- 1.401(a)(26)-7 · Testing methods.
- 1.401(a)(26)-8 · Definitions.
- 1.401(a)(26)-9 · Effective dates and transition rules.
- 1.401(a)(31)-1 · Requirement to offer direct rollover of eligible…
- 1.401(a)(35)-1 · Diversification requirements for certain defined…
- 1.401(b)-1 · Certain retroactive changes in plan.
- 1.401(f)-1 · Certain custodial accounts and annuity contracts.
- 1.401(k)-0 · Table of contents.
- 1.401(k)-1 · Certain cash or deferred arrangements.
- 1.401(k)-2 · ADP test.
- 1.401(k)-3 · Safe harbor requirements.
- 1.401(k)-4 · SIMPLE 401(k) plan requirements.
- 1.401(k)-5 · Special rules for mergers, acquisitions and similar…
- 1.401(k)-6 · Definitions.
- 1.401(l)-0 · Table of contents.
- 1.401(l)-1 · Permitted disparity in employer-provided contributions or…
- 1.401(l)-2 · Permitted disparity for defined contribution plans.
- 1.401(l)-3 · Permitted disparity for defined benefit plans.
- 1.401(l)-4 · Special rules for railroad plans.
- 1.401(l)-5 · Overall permitted disparity limits.