[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.414(r)-9]

[Page 759-760]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.414(r)-9  Separate application of section 401(a)(26).

    (a) General rule. If an employer is treated as operating qualified 
separate lines of business for purposes of section 401(a)(26) in 
accordance with Sec. 1.414(r)-1(b) for a testing year, the requirements 
of section 401(a)(26) must be applied separately with respect to the 
employees of each qualified separate line of business for purposes of 
testing all plans of the employer for plan years that begin in the 
testing year (other than a plan tested under the special rule for 
employer-wide plans in Sec. 1.414(r)-1(c)(3)(ii) for such a plan year). 
Conversely, if an employer is not treated as operating qualified 
separate lines of business for purposes of section 401(a)(26) in 
accordance with Sec. 1.414(r)-1(b) for a testing year, the requirements 
of section 401(a)(26) must be applied on an employer-wide basis for 
purposes of testing all plans of the employer for plan years that begin 
in the

[[Page 760]]

testing years. See Sec. 1414(r)-1(c)(3) and (d)(6). Paragraph (b) of 
this section explains how the requirements of section 401(a)(26) are 
applied separately with respect to the employees of a qualified separate 
line of business for purposes of testing a plan. Paragraph (c) of this 
section provides certain supplementary rules necessary for the 
application of this section.
    (b) Requirements applicable to a plan. If the requirements of 
section 401(a)(26) are applied separately with respect to the employees 
of a qualified separate line of business for a testing year, a plan 
(other than a plan that is tested under the special rule for employer-
wide plans in Sec. 1.414(r)-1(c)(3)(ii) for a plan year) satisfies 
section 401(a)(26) only if it satisfies the requirements of Sec. Sec. 
1.401(a)(26)-1 through 1.401(a)(26)-9 on a qualified-separate-line-of-
business basis. For this purpose, the nonexcludable employees of the 
employer taken into account in testing the plan under section 401(a)(26) 
are determined under Sec. 1.401(a)(26)-6(b), taking into account the 
exclusion in Sec. 1.401(a)(26)-6(b)(8) for employees of other qualified 
separate lines of business of the employer. Thus, in testing a plan 
separately with respect to the employees of one qualified separate line 
of business under this paragraph (b), all employees of the employer's 
other qualified separate lines of business are treated as excludable 
employees.
    (c) Supplementary rules--(1) In general. This paragraph (c) provides 
certain supplementary rules necessary for the application of this 
section.
    (2) Definition of plan. For purposes of this section, the term plan 
mean a plan within the meaning of Sec. 1.401(a)(26)-2(c) and (d), 
including the mandatory disaggregation rule of Sec. 1.401(a)(26)-
2(d)(6) for portions of a plan that benefit employees of different 
qualified separate lines of business. Thus, for purposes of this 
section, the portion of a plan that benefits employees of one qualified 
separate line of business is treated as a separate plan from the other 
portions of the same plan that benefit employees of other qualified 
separate lines of business of the employer, unless the plan is tested 
under the special rule for employer-wide plans in Sec. 1.414(r)-
1(c)(3)(ii) for the plan year.

    (3) Employees of a qualified separate line of business. For purposes 
of applying paragraph (b)(2) of this section with respect to a section 
401(a)(26) testing day, the employees of each qualified separate line of 
business of the employer are determined by applying Sec. 1.414(r)-7 to 
the employees of the employer otherwise taken into account under section 
401(a)(26) for the section 401(a)(26) testing day. For the definition of 
section 401(a)(26) testing day, see Sec. 1.414(r)-11(b)(8).

    (4) Consequences of failure. If a plan fails to satisfy paragraph 
(b)(2) of this section, the plan (and any plan of which it constitutes a 
portion) fails to satisfy section 401(a). However, this failure alone 
would not cause the employer to fail to be treated as operating 
qualified separate lines of business in accordance with Sec. 1.414(r)-
1(b), unless the employer is relying on benefits provided under the plan 
to satisfy the minimum benefit portion of the safe harbor in Sec. 
1.414(r)-5(g)(2) with respect to at least one of its qualified separate 
lines of business.


[T.D. 8376, 56 FR 63459, Dec. 4, 1991]