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DB/DC combo plan gateway when the DC plan has 1,000 hours requirement if terminated before the end of the plan year?

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Assuming the DB/DC combo plan has no any type of safe harbor contribution and the only contributions are employee deferrals and group based profit sharing.

It appears the client volume submitter plan doc. doesn't have any gateway language.

How do you handle the DB/DC combo plan gateway when the DC plan has 1,000 hours requirement if terminated before the end of the plan year?

 

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The gateway is zero. 

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but Mike if the ee has 1000 hours then he received the DB benefit. so now he has received a nonelective.

how is he not eligible for the gateway. last day rule, 1000 hours has no bearing. 

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If I'm understanding you correctly, there is an employee who needs to receive an allocation to satisfy the gateway, but isn't eligible to receive an allocation under the plan's formula.

If you can't pass coverage and nondiscrimination under the plan document as written, then you can adopt a corrective amendment that satisfies the requirements of 1.401(a)(4)-11(g) which provides for the additional benefits required to pass the test.

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taking it one step further

1.401(a)(4) -9(b)(2)(v)(D)(3) indicates a plan is permitted to treat each NHCE who benefits under the DB plan as having an equivalent normal allocation rate equal to the average of the equivalent normal allocation rates under the DB plan for all NHCEs benefitting under THAT plan.

 

as noted in another post, chances are the db/dc combo is top heavy, if he had 1000 hours and terminated in the DB plan he still gets the top heavy. and who knows what the document language says since he wouldn't normally be eligible in the DC for top heavy.

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you got me curious so I looked up the FT William language

I guess in a db/dc combo if ee works over 1000 hours and terminates

and the DB plan indicates top heavy is provided in the DC plan, then says the person is not eligible for top heavy in the DC plan because he terminated,  and [c] really should be filled out to include non-key terminees with over 1000 hours

8. Top-Heavy Allocations

Top-Heavy allocations are made to

a. [ X ] This Plan. Participants who share in Top-Heavy minimum allocations:

i. [ X ] Non-Key only. Any Participant who is employed by the Employer on the last day of the Plan Year and is not a Key Employee

ii. [ ] All Participants. Any Participant who is employed by the Employer on the last day of the Plan Year

iii. [ X ] Participants covered by a collective bargaining agreement will share in Top-Heavy minimum allocations provided retirement benefits were the subject of good faith bargaining.

b. [ ] Pursuant to the terms of

c. [ ] Other (include information about which Plan allocations are made to and which Participants in this Plan will share in

Top-Heavy minimums):

d. Other plan maintained by the Employer

i. [ X ] N/A - no other plan

ii. [ ] Defined Contribution

iii. [ ] Defined Benefit

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Thank you everyone!

Just to clarify, the case was that some participants terminated before the end of the plan year with less than 1,000. In order to get NEC the plan requires terminees to have worked 1,000 hours.

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2 hours ago, Tom Poje said:

but Mike if the ee has 1000 hours then he received the DB benefit. so now he has received a nonelective.

how is he not eligible for the gateway. last day rule, 1000 hours has no bearing. 

Tom, the way I read the OP he was talking about somebody who worked less than 1000 hours so there would not have been a DB accrual.

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I think Mike's original response is correct but I am curious, what VS document are you using that does not have gateway language in it?

  

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