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TH only need Gateway?


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I have a participant who was eligible for the 401(k) piece of the 401(k) plan in 2020.  She had deferrals, got a match and a Top Heavy contribution equal to 3% of comp minus the match.  Comes out to about 2% of TH.  She is not eligible for the Profit Sharing component until 2021.

It's a cross-tested plan.  Gateway is 5% as an owner is getting a 22% contribution.  My software is saying the plan passes gateway even though the participant above is at 2% ER contribution. 

Brain cramp right now.  Is that right?  TH only doesn't need a gateway?  She shows up on the rate group test.

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Never mind.  Asked and answered:




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regs require all benefiting participants (nonelective contributions) to receive the gateway minimum

employee received top heavy, which is a non elective contribution

conclusion: ee is entitled to the gateway

possible exception #1: ee can be treated as an otherwise excludable

possible exception #2 (sort of) : ee entered plan mid year. the gateway minimum can be based on comp from date of participation. In that case the top heavy is more than the gateway minimum so no bumping up is needed.[/quote]



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