Untitled Document

412i Carve Out Discrimination Tests

	Ratio Percentage Test
		Ratio of the percentage of covered Non Highly Compensated Employees (NHSE) to the percentage of covered Highly Compensated Employees (HSE) must be 70% or greater. Example: In a business with 8 employees eligible for coverage, 2 are highly compensated (HSE) and 6 are not. The percentage of covered HSE is 25% and the percentage of covered NHSE is 75%. The ratio of the percentage of the two groups is 300% (75% / 25%)
	Minimum Coverage Test
		Plan must cover no few than 40% of the eligible employees. Therefore, in our 8 employee group, 3.2 employees (rounded to 4) must be covered under each pan. 4 employees in under the 412i and 4 employees under the 401k.