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There is a safe harbor plan that is top heavy. The plan also has a New Comp and wants to exclude 3 Non-Key employees from receiving a Profit Sharing. These Non-Key Employees are also HCE that are excluded from receiving the Safe Harbor Non-Elective. Can those individuals be excluded from receiving the 3% Top Heavy/Minimum Gateway OR do they have to receive a funding.

I have a client that wants to excluded commission only sales people from benefiting. The plan passes coverage as some of these sales guys are HCE's. The plan also passes the average benefits tests and the rate group tests. The only test that is failing is the gateway test. My question is do we need to benefit the lower income sales people at 5% to meet our gateway requirements?

A TPA has asserted the following. A CB/DC combo plan that requires a 7.5% Gateway covers 6 of 10 ees in their CB plan and 10 of 10 in the PS plan and the average NHCE EAR is 2.5% in the CB plan. The ER PS contribution is 5%. Question is do the employees who are not in the DB plan get to use the 2.5% avg EAR, or since they are not in the CB plan, they may only use the PS 5% and therefore must up the PS to a full 7.5%?

A plan sponsor has a Cash Balance Plan and 401(k) PS plan with a 3% safe harbor allocation. The PS plan has a cross-tested allocation with 7 different allocation groups. The plan was not designed to have one group per participant because the plan sponsor is a Partnership and the IRS has stated that this may not be appropriate (separate discussion). The two owners and two employees are included in the CB plan. 4 additional NHCE employees are excluded from the CB plan, but are included in the 401(k) PS Plan. The special gateway is 7.5%. For the 4 employees NOT in the CB plan, they receive the 3% safe harbor plus 4.5% profit sharing to meet this gateway. The 2 employees in the CB plan only need 2.7% in PS to pass testing. This leaves employees in the same PS allocation group receiving different PS percentages (4.5% vs. 2.7%). I would not have thought that this was okay because the 401(k) plan document states that all employees in the same group should receive a pro-rata allocation with the group (i.e. same %). Are there special rules that allow us to give differing % in the same PS group if it is merely bumping up the allocation for some employees to meet the minimum gateway? If we are allowed to give different percentages, does it require an 11(g) amendment? Our actuary says no, but I am not 100% convinced.

A 401k Safe Harbor Plan has the following provisions: - 6 mos elig for 401k deferral contributions (no min age) - 12 mos/1000 hrs (no min age) for employer SH (3%), discretionary PS (cross tested) - dual entry dates, 1/1 and 7/1 2015 Plan Year, there are 2 employees newly eligible as of 7/1: - 1 HCE (spouse of owner) - 1 NHCE Question 1 Assuming the Plan is NOT TH for the 2015 plan year, the 2 newly eligible participants will not receive SHNEC or PS but if their deferral %s pass the ADP test (testing only them), is it correct that the Plan will not fail any other testing (e.g. Gateway mins)? If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year? Question 2 Assuming the Plan IS TH for the 2015 plan year and all other statements above apply... Assuming ADP test for 2 newly eligible passes, can the employer contribute 3% TH for these 2 newly eligible (assuming they are still employed on the last day of PY) without tripping the Gateway testing (assuming the GW minimum is at least 5%)? If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year? Thank you for your assistance.

Hello All, I have a question regarding a Safe Harbor Plan that also happens to have a last day requirment. The plan also has crosstesting thus everyone is in their own rate group. I have a participant that has termed before the year end, and was a participant in the plan throughout the year entitling him to SH. The plan is also maximizing the owners and needs to satisfy gateway requirement. Since the participant is technically not eleigible for the additional 2 % that he needs to satisfy gateway (because he was not employed on the last day), do we have to amend the plan so that he is eligible for PS for the year or is it understood that a participant that has recieved SH can also receive profit sharing to recieve gateway? Please advise.

What is the Gateway Minimum for the NHCEs in the following scenario? HCE is receiving the Safe Harbor Match (capped at 4%) and a 10% Profit Sharing Allocation. Assume NHCEs did not receive any SHM because did not defer any 401k. Also assume 401(a)(4) testing is passed with as little as a 3% PS allocation to the NHCEs. Is the Gateway Minimum additional allocation requirement 0.34% (3%PS + 0.34%GW = 3.34% * 3 = 10% PS allocation to HCE)? OR Is the Gateway Minimum additional allocation requirement 1.67% (3%PS + 1.67% GW = 4.67% * 3 = 14% total SHM+PS allocation to HCE)?

I have a client who has a combined PS/DB plan. There are terminated participants who are getting a Gateway contribution. The client wants to pre-pay the Gateway contribution on the PS side using the forfeiture account every time someone terminates vs. waiting until the end of the plan year. Is this allowable? So for instance, someone terminates on 4/11/15. He wants to give them their 5% and then process their termination. Thank you-

We had a Safe Harbor 401(k) plan in 2013. During that year we adopted a Cash Balance plan. It had started with an eligibility window that brought in Employee "A". ("A" is not eligible for the 401(k) Plan in 2013 as of the date of this post.) Turns out, the plans cannot satisfy the Special Gateway requirement because "A" did not get a benefit in the 401(k) plan. The perfect solution would be to adopt a corrective amendment within 9.5 months admitting "A" into the 401(k) plan and giving him the same 7% as all others. Question: Would a corrective amendment that admits a new participant constitute an impermissible (mid-year) amendment of a Safe Harbor plan? I think it is permissible because it does not conflict with anything in the 2013 Safe Harbor Notice. It is also the kind of amendment that IRS says it would be inclined to permit (but to my knowledge, they have not yet expressly permitted). What do you think? Thank you very much.

We have a PS 401(k) plan with deferrals, 3% SH NEC and New comp Profit Sharing allocation. The plan requires 1,000 hours for PS, with no year-end requirement. There are about 3 participants who terminated in 2013 with less than 1,000 hours and so are not eligible for PS; however: These participants still receive 3% SH The SH allocation is considered part of the PS contribution for the 401(a)(4) General test Without the additional PS allocation, these participants are in the general test getting 3% and therefore the plan does not pass the gateway minimum allocation test and therefore fails 401(a)(4) The gateway test would pass if these terminated participants get an additional 1.38%, but they are not eligible to get any PS allocation (since they had under 1,000 hrs for the year) How should this be handled?