ERISA Benefits Law Desk ReferenceERISA Benefits Tech, LLC

Part 5 · Chapter 1

General Qualified Plan Testing (§410(b) and §401(a)(4))

Law stated as of October 3, 2026 · Qualified Plan Testing, Eligibility, and Vesting

Scope and status

The §410(b)/§401(a)(4) regulatory framework is long-settled (the 1991/1993 final regulations); the moving pieces are the annual indexed limits and the LTPT testing exclusion — verify those before relying on them.

Citations are to primary authority (Code §§401(a)(4), 410(b), 414(q), 414(s), 401(l), 414(b)/(c)/(m)/(o), 414(r); the comprehensive nondiscrimination regulations — T.D. 8360 (1991) and T.D. 8485 (1993) — at Treas. Reg. §§1.401(a)(4)-, 1.410(b)-, 1.414(s)-1; the §410(b) coverage regulations (T.D. 8363); and IRS guidance).

The testing order (work it in this sequence): (1) controlled group/ASG → (2) testing year and plans in the group → (3) mandatory disaggregation → (4) permissive aggregation → (5) HCE/NHCE → (6) compensation → (7) excludable employees → (8) §410(b) ratio percentage → (9) §410(b) average benefit test if needed → (10) §401(a)(4) safe harbor or general test → (11) rate groups → (12) cross-testing/gateway → (13) permitted/imputed disparity → (14) BRFs → (15) corrective amendment/EPCRS. Related questions are treated elsewhere: the controlled-group/ASG determination in Part 1 (Controlled Groups and Affiliated Service Groups); permitted/imputed disparity (§401(l)), §415, and top-heavy in this Part's 401(k) and 401(m), ADP/ACP, §415, §416 Top-Heavy, and §404 Deductions (which owns that source material); LTPT eligibility inputs in this Part's Minimum Participation and Vesting; and corrections in Part 21 (Plan Corrections: EPCRS, VFCP, and DFVCP).

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — The Testing Employer and the Two Tests

A1.The aggregated-employer rule

Part 5, ch. 1, § A1

Coverage and nondiscrimination are tested across the entire aggregated employer — all entities in a controlled group (§414(b)/(c)), affiliated service group (§414(m)), or §414(o) arrangement — counting leased employees (§414(n)). Statute: Code §414(b), (c), (m), (n), (o).

A2.Coverage (§410(b)) vs. nondiscrimination (§401(a)(4)) — two separate tests

Part 5, ch. 1, § A2

§410(b) asks whether the plan covers (benefits) a nondiscriminatory group of employees; §401(a)(4) asks whether the contributions or benefits provided to that group are nondiscriminatory in amount, in availability of benefits/rights/features, and in the timing of amendments. Statute: Code §§410(b), 401(a)(4); Final reg: Treas. Reg. §1.410(b)-2, §1.401(a)(4)-1. A plan must pass both, and the testing option chosen for §410(b) must be used for §401(a)(4) for the same year. Final reg: Treas. Reg. §1.410(b)-8.

Part B — HCE/NHCE Determination (§414(q))

  1. B1The two routes to HCE statusSubscribers
  2. B2The top-paid-group and calendar-year-data electionsSubscribers
  3. B3Former HCEsSubscribers

Part C — Compensation (§414(s))

  1. C1The §414(s) testing-compensation definitionsSubscribers
  2. C2The compensation-ratio test and the no-exclusion-above-a-dollar-amount ruleSubscribers

Part D — §410(b) Coverage

  1. D1The ratio percentage testSubscribers
  2. D2The average benefit test (when ratio percentage fails)Subscribers
  3. D3Excludable employees — do not invent categoriesSubscribers
  4. D4Mandatory disaggregation and permissive aggregationSubscribers
  5. D5The §410(b)(6)(C) transition rule and LTPT exclusionSubscribers

Part E — §401(a)(4) Amount Testing

  1. E1Design-based safe harbors vs. the general testSubscribers
  2. E2The general test and rate groupsSubscribers

Part F — Cross-Testing and the Gateway

  1. F1Cross-testing on equivalent benefit accrual ratesSubscribers
  2. F2The minimum-allocation gatewaySubscribers
  3. F3DB/DC aggregation and imputed disparitySubscribers

Part G — Benefits, Rights, and Features (BRFs)

  1. G1The three BRF categories and the two availability testsSubscribers
  2. G2Current and effective availabilitySubscribers
  3. G3BRF aggregation and eliminationSubscribers

Part H — Amendments, Terminations, and Corrective Amendments

  1. H1Nondiscriminatory timing of amendments and terminationsSubscribers
  2. H2The §1.401(a)(4)-11(g) corrective amendmentSubscribers
  3. H3Closed/frozen DB plan reliefSubscribers

Worked examples

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

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