Gateway provided in another DC plan?

[Guest Judy S]

An employer sponsors 2 plans-a cross-tested profit sharing plan and an ESOP, both with the same eligibility requirements and both covering the same employees.

Both plans pass 410(b) on their own and are not aggregated for 401(a)(4).

If the employer provides a 5% of pay allocation in the ESOP, does that satisfy the gateway and allow him to use cross-testing in the profit sharing without worrying about the gateway?

[AndyH]

I think that you would need to permissively aggregate the plans to use the 5% from another plan toward the gateway and the ESOP cannot be permissively aggregated, so I think the answer is no.

[Guest Judy S]

I agree re not being able to aggregate the ESOP. If the second plan were a money purchase plan, for instance, you are saying that you would have to permissively aggregate it with the cross-tested plan in order to use the MP contribution toward the gateway--correct?

[AndyH]

Yes, that's the way I read the regs. Everything talks about "the plan". Clearly the 5% isn't being contributed to "the plan", but "the plan" can be defined as the aggregated plans if you choose to permissively aggregate.