Allocations to Groups

[Archimage]

I have a cross-tested plan with two groups, physicians and all others. It passes testing with the minimum gateway amount. I have a few HCEs in the "all others" group. Do you think it is possible to give the HCEs in this group the minimum of 3%? I am thinking the contribution to the group could be worded something like "3% plus any amount needed to meet the gateway minimum". Is this acceptable?

I was thinking that it would be acceptable but then I started thinking, the plan doc says the formula for the group allocations for the group is pro rata based on comp. Your thoughts?

[rcline46]

The way I read the min gateway amendment, I would allocate 3% to the all others group, then let the gateway amendment 'force up' the NCEs.

I think this process works because your allocation within the group is modified by the document to selected employees, not by the employer.

[AndyH]

As rcline implies, you can probably get where you want to be but not necessarily the way you propose. If the doc says prorata within group, than you do a prorata 3%. Then if you fail gateway, and if you have the necessary language, that language may cause a bump up to 5% for NHCEs. If you don't have language that accomplishes this, then I say no, everyone must get the same percentage within each group.

[Blinky the 3-eyed Fish]

Although if you don't have the gateway amendment, you can always create it and do so retroactively as prescribed under -11(g).

[AndyH]

Right as rain.

[FJR]

Why not add another group?

[Archimage]

That is fine for going forward but you cannot put them in their own group retroactively.