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Safe Harbor Match with Cross-Tested Profit Sharing

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401(k) uses Safe Harbor Match & Cross-Tested Profit Sharing

Plan is not Top Heavy

4 EEs who have met 1/21 eligibility all with >1,000 hrs (no term EEs) - 2 HCEs (1 is the Owner)  / 2 NHCEs

Both HCEs & 1 NHCE made 401(k) contributions  (non Owner HCE was excluded from SHM)

HCEs receiving max PS

Is Gateway required for NHCE who did not defer?

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No, gateway is not "required" for either NHCE in this circumstance (assuming you have every employee in their own group).  As long as you can pass the non-discrimination test with one or the other receiving an employer non-elective contribution the other doesn't need to receive anything as far as gateway goes.

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Thanks Mike !

So if Profit Sharing is rich enough to the NHCE who deferred & received the SH Match then the NHCE who did not defer (& worked >1,000 hrs & was an active EE at year-end) would not receive Gateway even though he's eligible to receive a Profit Sharing contribution?

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As long as the document has that person in their own group, it doesn't violate ADEA, etc. and otherwise doesn't break any rules it should work.

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put another way. any NHCE who receives a non-elective contribution must receive the gateway.

the non-elective can be profit sharing (or forfeiture). A non-elective is not a match or deferral.

 

 

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Does anyone have any credible resources that describe how a NHCE can get a $0 allocation in a cross tested plan when each EE is in their own rate group? 

Based on everything I read the gateway only needs to be provided to NHCEs that get an allocation, which would agree with the experts in this thread.

So, if the plan can pass coverage by excluding specific NHCEs and it passes gateway for those NHCEs that do get an allocation, and it also passes rate-group testing, I don't see a reason why the ER could exclude certain NHCEs from the allocation. 

Does anyone know of examples of this scenario from ASPPA or the EOB?

FWIW, the plan isn't TH or SH so there would be no Non-elective contribution allocated other than the discretionary PS contribution which excludes some HCEs & NHCEs.

I'm trying to provide supporting documentation to show that this can be done.

Thanks!!

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I don't doubt that at all. I am just trying to get some documentation to provide instead of "my friends on a website said that it is okay"... 

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I'm sure there are a gazillion messages on BenefitsLink that describe the pitfalls associated with selectively deciding that one or more otherwise eligible participants get $0 in one or more plan years.

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