I have a safe harbor 401(k) with the basic match (100% match up to 3%, 50% up to 5%) to only those who defer. For my new comparability profit sharing allocation, say I want to make a contribution to all eligible NHCE's of 5%. Does that mean I give 5% to all NHCE's and end up with the ee's that get a safe harbor match getting a higher % of compensation, or do I just need to allocate the amount needed to get those ee's that get a safe harbor match up to 5% of compensation so that everyone ends up with the same % of compensation? this might sound like a dumb question but it's my first plan not using the nonelective match for safe harbor.
Matching contributions are not taken into account for purposes of the minimum gateway (5%). Thus, so long the plan is not top heavy, the 5% can be given to only those NHCE's who meet the plans allocation requirements for the cross tested employer contribution. See Explanation of Provisions Paragraph B to the final 401(a)(4) regs.
I realize that discretionary match cannot be used for minimum gateway. However, in a safe harbor 401(k) using a nonelective 3% contribution, you can use that 3% contribution to help satisfy the minimum gateway and top heavy. The match contribution that is being used that I referenced in my original post is an accepted safe harbor match, so can that also be used to help satisfy the min gateway and top heavy, and, if so, how do I handle my original question?
All employer matching contributions made and subject to Code section 401(m) and the regulations thereunder are not taken into account in determining satisfaction of the minimum gateway. This includes ADP and/or ACP safe harbor contributions pursuant to 401(m)(11).
I went to a corbel cross testing seminar back in November and have materials that say you can use the 3% nonelective safe harbor contribution to help satisfy the minimum gateway requirements and the top heavy requirements. I'm not trying to sound like a jerk, just telling you what it says in the materials I received.
I am not disagreeing that a safe harbor 3% nonelective serves three purposes (e.g.- TH minimum, ADP safe harbor and application to minimium gateway), but that was not what you were asking. As such, my answer was given accordingly.
Like I had previously stated, the minimum gateway allocation is determined by taking into account all non-matching employer contributions and forfeitures thereon, for the plan year.
Forgive me, but I don't understand your previous comments, as their purpose seems, to me, to be irrelevant.
It sounds to me like she is reading the materials correctly with respect to the non-matching SH contributions. That is, those can be used to satisfy the gateway. I think everybody agrees with that. But the matching SH is not counted towards the gateway. All of the responders are in agreement on that score, as well.
Can I add another gateway/top heavy question?
I have a top heavy non-safe harbor 401(k) plan with a match and a cross-tested employer contribution.
#1: Eligibility and entry for the 401(k), 401(m) and profit sharing is all the same, so all participants are in each portion of the plan.
Eligibility to receive the profit sharing is 1,000 hours and last day employment.
I have a participant who defers and receives a match that is equal to 3% of his gross pay for the plan year. He does not work 1,000 hours, however, and is therefore, not eligible for the profit sharing contribution. The plan provides that the match can be used to satisfy the top heavy, so he receives his entire top heavy minimum in the 401(m) plan.
Is this participant required to receive the gateway?
#2: Eligibility and entry for 401(k) and 401(m) is immediate. Eligibility for PS is 1 year, age 21 with 2 entry dates.
Participant is in 401(k)/401(m) but does not defer. Participant receives top heavy minimum. Because the participant is not eligible for the PS plan, I do not believe he needs to get the gateway. If he were also a PS participant and eligible only for the top heavy minimum, then I would give him the gateway. In a search, I saw a different answer given on this issue, but the discussion was over a year old so I would just like confirmation of my position.
anyone who receives a nonelective contribution (this includes forfeitures) must receive the minimum gateway if the plan is to be cross tested. does not matter whether they are eligible for the ps or not.
the one exception is if the plan is broken into two parts for testing purposes - statutory includables and otherwise excludables.
a match is geberally not considered a nonelective contribution (because you have to 'elect' to defer to get the match) thus, if ee has satisfied top heavy via the match, it would appear ee would not have to get a minimum gateway.