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February 16, 2009

Minimum Coverage Test

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Definition

A test that must be performed for qualified plans and 403(b)s to ensure the plan meets one of the following requirements:

  • The plan benefits at least 70 percent of employees who are not highly compensated employees.
  • The plan benefits:
    • a percentage of employees who are not highly compensated employees which is at least 70 percent of
    • the percentage of highly compensated employees benefiting under the plan.
  • The plan satisfies the average benefits test

Referring Cite

IRC § 410(b), Prop Treas Reg §1.410(b)-6(g)

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