Different eligibility requirements for different sources

[dmb]

If eligibility is more liberal for 401k contributions than (X-tested)profit sharing contributions, and a participant is eligible for 401k but not for PS, does that participant need to be included in the rate group (midpoint) testing for the profit sharing portion?? I know the participant must be included in the avg. bfts percent test. Thanks.

[Tom Poje]

well, you did not indicate if plan is top heavy.

if plan is top heavy, then ee received a nonelective contribution.

at that point you would have to include, plus a possible minimum gateway.

or, you could test otherwise excludables separately (both rate group and avg ben % test) then, if I understand things correctly, the otherwise excludables don't get the gateway unless you have the bad luck to have an hce in that group.