Minimum DB/DC Gateway for terminated participants w/1,000 hrs.

[Guest Roman]

A Company has a DB Plan and a cross-tested PS Plan, which are aggregated for the general test. The cross-tested PS Plan has the 1000-hr. and last day provisions. The Plans are top-heavy. Th participants who terminated and worked 1,000 hours during the year will accrue a DB Plan benefit during the year.

1. Will these participants be entitled to a 2% top-heavy DB minimum (not 3% since they are not benefiting in the PS Plan)?

2. Should they be entitled to the minimum DB/DC aggregate allocation gateway?

3. If the Company did not have the DB Plan, do you agree that these participants need not receive any top-heavy PS allocation?

[mwyatt]

On point 1, the 3% for 2% was a "buyback" feature if the plan wasn't super top heavy for the 1.25 rule under 415(e) - obviously a moot point now.

[Tom Poje]

insufficient info to even attempt to answer #2.

read 1.401(a)(4)-9(b)(2)(v)

you can not test a DB/DC plan on a benefits basis unless

1. plan is primarily DB in character OR

2. consists of broadly available separate plans (You have indicated this is not true)

OR

3. provides min aggregate allocation gateway

since some ees are receiving DB and not DC you might actually be primarily DB in character.

if you only had a ps plan, and a last day rule, AND AND AND it is not a 401(k) plan then normally you would not have to provide a top heavy (though there are a few documents with less stringent top heavy requirements)

[AndyH]

1. Yes.

2. Probably but not necessarily for the reasons Tom cites and also not if they are "otherwise excludable" employees.

3. Yes.