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February 16, 2009

Minimum Coverage Test

Your Guide

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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)

Additional Helpful Information

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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