U.S. Coverage and General Tests
The nondiscrimination coverage and general tests tool provides access to the parameters for performing the tests required by Sections 410(b) and 401(a)(4) of the U.S. Internal Revenue Code. The parameters identify the tests to perform and the database containing the necessary data. The database may be prepared by prior execution of the U.S. Nondiscrimination Accrual Rates command or you may import data produced outside ProVal into a ProVal database.
Select the Database containing records for the participants whom you wish to include in the tests. Each participant’s record must contain a field whose value is the HCE/NHCE code, to identify the highly and not highly compensated employees. The record should also include any other data items needed for the test(s) you are running (e.g., accrual rates if you are running a general test). Note that ProVal will process all records included in the database, regardless of the ProVal status the record’s status field code is mapped to; thus, if this database was not created by use of the Individual Results topic of the Accrual Rates command, you need to be sure that only those records you wish to process exist on the database. (For example, if records whose status code field is mapped to the ProVal “Vested valued through active” status are included on the database, they will be processed, as would records with other inactive status codes, if included on the database).
Check the box(es) for the 410(b) coverage tests to run. You may choose among the ratio percentage test, the nondiscriminatory classification test and the average benefit percentage test. You may run all the tests at once.
Check the box(es) for the 401(a)(4) general tests to run. The available choices are the ratio percentage test and the nondiscriminatory classification test. You may run both tests at once.
Select a topic to edit contains entries for each category of information (topic) found under the Coverage and General Tests command. Click the name of a topic to access its parameters:
Ratio Percentage and Nondiscriminatory Classification Tests
Average Benefit Percentage Test
Note: Some tests required to demonstrate compliance with nondiscrimination requirements are not numeric and therefore cannot be performed in ProVal. Thus passing the tests administered by ProVal’s U.S. Coverage and General Tests tool does not necessarily indicate a nondiscriminatory plan.