metsfan026 Posted May 2, 2023 Share Posted May 2, 2023 Good afternoon. I think this is a silly question, but I just wanted to make sure I'm not overthinking it. I know the Gateway for a Cash Balance/DC Combo Plan is 7.5%. An employer can give more than that, correct? The owner actually isn't taking a Profit Sharing contribution for himself. He'd like to give the employees a little bit extra (about 10% into the Profit Sharing). I just wanted to make sure that wouldn't cause an issue (I don't think so, since he's being more generous, but maybe I'm overthinking it). Link to comment Share on other sites More sharing options...
CuseFan Posted May 2, 2023 Share Posted May 2, 2023 No issue. The gateway for a combo could range from 5% to 7.5% depending on the highest HCE rate, and that gateway minimum is simply the cost required to enable cross-testing of the DC component. Lou S. 1 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
Jakyasar Posted May 2, 2023 Share Posted May 2, 2023 Gateway is not always 7.5%, it could be less. Having said that, as long as there is room for additional deduction, of course. However allocation for additional amounts will depend on how the plan formula is written under PS portion. Lou S. 1 Link to comment Share on other sites More sharing options...
metsfan026 Posted May 2, 2023 Author Share Posted May 2, 2023 2 minutes ago, CuseFan said: No issue. The gateway for a combo could range from 5% to 7.5% depending on the highest HCE rate, and that gateway minimum is simply the cost required to enable cross-testing of the DC component. Perfect, thanks! Didn't think being more generous would be a problem, but then I started overthinking it. Link to comment Share on other sites More sharing options...
401kAllTheWay Posted May 5, 2023 Share Posted May 5, 2023 7.5% is very generous and typically that is the number I have heard. the other complicated way if you are worried about testing, you could setup a “split plan design” to maximize your CB contributions. For the sake of your own sanity, fight as hard as you can for 7.5%. Link to comment Share on other sites More sharing options...
DBnme Posted May 17, 2023 Share Posted May 17, 2023 https://www.milliman.com/en/insight/nondiscrimination-testing-minimum-allocation-gateway Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now