Age weighted ps combined with 401(k)

[Belgarath]

Say you have an age weighted PS plan. The plan never gets to the average benefits test. And gateway doesn't apply.

Now you add a 401(k) plan. And let's assume that it is a safe harbor nonelective, so there are employer contributions that are not 401(k) or (m) contributions.

Does this move the age weighted plan into having to pass the test for gateway?

[SoCalActuary]

One plan or two?

If each is separate, you have dual expenses for 5500 audit bond etc.

If together, you have two benefit structures in the same plan.

General test should still pass on benefits basis, unless HCEs are young. Then you should test on contributions. Is the gateway a problem?

[Belgarath]

Two plans. Don't know if gateway is a problem - at this point, the whole question is purely theoretical. Of course, I usually find out three months later that the "theoretical" question was based on a real situation...

But I suppose that it might mean the employer has to put in as much as 2% more in the age weighted, if gateway will apply. (I haven't seen many AW, but they were always top heavy, so I'm assuming min 3% anyway.)

So I'm not sure if this means that gateway automatically applies, or will it apply only if it has to move to the average benefits test?

[SoCalActuary]

Does each plan pass a safe-harbor on its own? If so, you are not required to aggregate the two plans. Does either plan depend on the other for qualification? If not, the new safe-harbor should pass on its own. I don't think you need a gateway unless you are playing with eligibility, benefit levels by group, etc.

Your document must also determine which plan meets top-heavy. I would think the safe-harbor plan would be ok, unless there are non-key HCE's who don't get the safe-harbor 3%.

[AndyH]

Interesting question.

If there are two plans and they need not be aggregated, as SoCal said you are clearly exempt from the gateway.

If one is top heavy and the minimum is being provided by the other plan does that require aggregation for 401(a)(4)? I don't think so but I'm not sure (I recall a long discussion of this about a year or so ago on the cross testing board).

If the plans for whatever reason are aggregated then you must satisfy the gateway unless you can pass on a contributions basis or unless you satisfy one of the exceptions for minimum allocations in the 2001 (a)(4)-8 Cross testing regulations, and that is by no means certain.