cross tested PS w/ 401k

[dmb]

I think i know the answer to this, but need a little confirmation. If a participant terminates with less than 500 hours (therefore not receiving PS alloc), but was eligible for deferrals, does the participant need to be included in the average benefits test?? Thanks.

[AndyH]

yup

[Guest Julie Woulfe]

follow up question....if this was a safe harbor plan, and this terminated person with less than 500 hours received a 3% safe harbor contribution (but no Profit Sharing), then do they have to be included in the rate goup test?

[Blinky the 3-eyed Fish]

Another yup.

[AndyH]

The reasoning (which I find peculiar) is that the person is considered an employee and employees must be in the test. An employee is a person who benefits under the plan. The person gets an allocation (albeit 3%), is therefore an employee, and therefore must be in the rate group test. Yup, thats someone's thought process.

[Tom Poje]

and since the ee received 3% SHNEC which is a type of nonelective, the ee must have an additional contribution if necessary to receive the gateway as well...