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Combo plans - gateway issues


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Hi

Need to refresh memory.

Looking at a combo plans (DC+CB). Plans are top heavy and top heavy benefits are provided in the DC plan only. Not my typical way of designing.

CB has 1000+ hour requirement for pay credit

DC has 401k + 3% non-elective safe harbor + profit sharing.

Profit sharing portion has no hour requirement but has last day rule.

Gateway is 7.5% i.e. 3% safe harbor + 4.5% profit sharing

Have a participant (in both plans) terminated during the plan year with more than 1000 hours of service, however not employed at end of year.

The participant gets CB pay credit, the minimum to satisfy 401a26.

The participant gets 3% mandatory safe harbor.

What else does he get? Additional 2% profit sharing for top-heavy (it is 5%) or full 4.5% profit sharing for gateway?

Whichever he gets, I think i need 11-g, correct?

Thank you

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2 hours ago, Jakyasar said:

Hi

Need to refresh memory.

Looking at a combo plans (DC+CB). Plans are top heavy and top heavy benefits are provided in the DC plan only. Not my typical way of designing.

CB has 1000+ hour requirement for pay credit

DC has 401k + 3% non-elective safe harbor + profit sharing.

Profit sharing portion has no hour requirement but has last day rule.

Gateway is 7.5% i.e. 3% safe harbor + 4.5% profit sharing

Have a participant (in both plans) terminated during the plan year with more than 1000 hours of service, however not employed at end of year.

The participant gets CB pay credit, the minimum to satisfy 401a26.

The participant gets 3% mandatory safe harbor.

What else does he get? Additional 2% profit sharing for top-heavy (it is 5%) or full 4.5% profit sharing for gateway?

Whichever he gets, I think i need 11-g, correct?

Thank you

He gets the greater of 2% or gateway. Remember the gateway is reduced by cash balance pay credit. Not dollar for dollar but actuarially. Also remember that the gateway offset can be based on each individual's pay credit or the average. As far as an 11g amendment is concerned some documents have an exception just for gateway and therefore no amendment would be necessary.

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