Another DB/DC Gateway question

[Guest Mike Spickard]

I am working on a DB/DC-cross tested floor offset plan. 1.401(a)(4)-9(B)(2)(v)(D) states that each NHCE in the DB/DC plan must satisfy the minimum aggregate allocation gateway. I have to include about 40 people in the DB plan (to pass 401a26), but only about 25 in the DC plan to pass 401(a)(4) on a combined basis. So, 15 or so participants will get a 0.5% of earnings annual benefit accrual in the DB plan and nothing else - so I presume...

But do I have to give the 7.5% to these 15 or so in the DC plan since they are NHCE's who receive a benefit in the combined DB/DC plan?

[Mike Preston]

No, you can give them a benefit in the DB plan instead that equates to a 7.5% allocation rate. Or, if more than 50% of your NHCE's receive an overall benefit from the db plan that is greater than the benefit under the dc plan you satisfy the primarily db in character gateway.

[Guest Mike Spickard]

Thanks Mike. Could I exclude those 15 from the DC plan (at least the PS portion), and avoid the 7.5% of pay contribution (or 7.5% DB equivalent) since they would not be part of the "DB/DC combo"? or would they still be considered part of that whole equation?

Since I feel like I am stretching here, I think I know what the answer is.

[Mike Preston]

Yes, you know the answer. If they are participating in a plan that is aggregated, they are subject to the gateway.