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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.