Discretionary ER contribution - subject to minimum gateway?

[jaemmons]

If a sponsor of an ERISA 403b plan has an employer discretionary contribution which is class based, since it is subject to the nondiscrimination rules under IRC 401(a)(4), as referenced in IRC 403(B)(12), is it subject to the minimum gateway allocations also?

IMO I would say yes, but I wanted to know if anyone has a contradictory opinion.

thanks

[Belgarath]

Hi - I'm not sure exactly what is meant by "class based" - different people use different terminology for the same things.

If the plan satisfies the nondiscrimination testing by using equivalent benefit rates (cross testing) then yes, I agree that it is subject to gateway.

If it satisfies the nondiscrimination using another method, then no, it's not subject to gateway.

[jaemmons]

By "class-based" I mean that different groups of employees (not based upon age) receive different allocation rates. If I broke the plan into component plans, one for each allocation group, would I skirt the gateway? The groupings are based upon being an employee of the employer on a certain date. Not the usual groupings, which I am thinking would allow me to break the plan into components and test each separately for 401(a)(4).

Any thoughts??