Bifurcated Eligibility Requirements

[stephen]

The plan has bifurcated eligibility requirments- 1 year of service for 401(k) purposes; 2 years of service for employer's discretionary contribution. The plan provides for a 3% nonelective safe harbor contribution. The discretionary contribution is cross-tested.

Do we have to give the 5% minimum contribution to satisfy the gateway test to participants, who receive the safe harbor contribution, even though they have not met the 2 years of service requirement to share in the employer's discretionary contribution?

[Blinky the 3-eyed Fish]

Yes and no. All who benefit in the nonelective portion of the plan must receive the gateway contribution. EXCEPT those that do not meet the statutory eligibility requirements (age 21 and 1 YOS) do not need to receive the gateway IF you are not cross-testing them.

In other words those that are not statutorily excludable and have not met the 2 YOS requirement need to receive the gateway. Those that are statutorily excludable may or may not need to.

And as always, your document needs to have provisions that allow the gateway contribution to be given.