Min Gateway as safety net for End of Yr requirement?

[Guest rickw]

Plan has end of year employment requirement. The Min. Gateway Amendment seems to say that I can allocate contribution to such a person anyway if I need to satisfy 401(a)(4). Does that mean this is a fail-safe, safety net to bring such person into the plan if I will fail testing otherwise? If so, and if you have multiple employees who fail end of year, is there any requirements as to *which* of them to give allocation to? Perhaps have to base on who was terminated the latest and work your way back?

Likewise, could you have over-1,000 hours requirement, and count on Gateway as a safety net if they need to be covered?

Thanks!

[Tom Poje]

curious as to exact wording of your gateway language.

I thought they all said something like

"IF an ee received a nonelective contribution, then he would receive the minimum gateway"

I don't see any pick and choose option in such language.

[Guest rickw]

Tom: I am thinking of non-401k so there might not be an Non-Elective Contributions. Just straight cross tested. I presume the speaker was referring to this part of the Corbel Gateway Amendment:

The Plan Administrator will allocate the Gateway Contribution without regard to any allocation conditions otherwise applicable to nonelective contributions under the Plan. However, Participants who the Plan Administrator disaggregates pursuant to Treas. Reg. Section 1.04(b)-7©(3), because they have not satisfied the greatest minimum age and service conditions permissible under Code Section 401(a), shall not be eligible to receive an allocation of any Gateway Contributions the Employer makes pursuant to this Section 3.04(H) unless such an allocation is necessary to satisfy Code Section 401(a)(4).

Thanks!

curious as to exact wording of your gateway language.

I thought they all said something like

"IF an ee received a nonelective contribution, then he would receive the minimum gateway"

I don't see any pick and choose option in such language.

[Tom Poje]

if you have a non-401k plan, the only type of contributions you have are nonelective contributions. (unless you had after tax contributions), so your one comment makes no sense. non elective simply means one had no choice, (made no election, if you will) as opposed to deferrals where you 'elect' to puit $ in the plan, hence the term elctive contribution.

you could have the following:

profit sharing plan (cross tested) with immediate eligibility.

a person will either receive a contribution or not, based on allocation conditions. (this includes top-heavy, which may be less than through the formula)

anyone who does not receive a contribution can not get the gateway.

anyone who receives a contribution will get the gateway (unless the individual could be treated as an 'otherwise excludable' and the non discrim testing is run disaggregating the groups. that person would simply receive the initial nonelective)

there is still no 'fail-safe' or picking or choosing unless one indeed chooses to test otherwise excludables separately. but once that has been determined, there is no further 'adding' people, or choosing who to give extra to.

hope that helps

[Guest rickw]

Thanks for the clarification. (I have mistakenly looked at "non-elective" term from the ER point of view.)

I may be mixing apples and 401ks here, but I thought that anyone "benefitting" under the plan would get Gateway. (For instance, a person receiving 3% SH 401k QNEC would be eligible for Gateway, even if they were not eligible for a regular contribution.) If I am correct, then wouldn't this apply to the "otherwise excludible": if they got some of the initial non-elective, they would be benefitting; so they could get Gateway too. "All or nothing" approach?

if you have a non-401k plan, the only type of contributions you have are nonelective contributions. (unless you had after tax contributions), so your one comment makes no sense. non elective simply means one had no choice, (made no election, if you will) as opposed to deferrals where you 'elect' to puit $ in the plan, hence the term elctive contribution.

you could have the following:

profit sharing plan (cross tested) with immediate eligibility.

a person will either receive a contribution or not, based on allocation conditions. (this includes top-heavy, which may be less than through the formula)

anyone who does not receive a contribution can not get the gateway.

anyone who receives a contribution will get the gateway (unless the individual could be treated as an 'otherwise excludable' and the non discrim testing is run disaggregating the groups. that person would simply receive the initial nonelective)

there is still no 'fail-safe' or picking or choosing unless one indeed chooses to test otherwise excludables separately. but once that has been determined, there is no further 'adding' people, or choosing who to give extra to.

hope that helps

[Tom Poje]

the 3% safe harbor QNEC is still a non elective (qualified nonelective contribution), so you are correct once someone receives a nonelective they are 'eligible' or 'required' to receive the gateway.

However, the gateway is aptly described as a 'gateway', something you must cross through before getting to cross testing.

so, you as Moses the fearless leader, have gathered up your people - those who have 1 year svc and age 21, approach the gateway. did everyone in this group who receined a nonelective receive the gateway? - if yes, then pass through and cross test. otherwise bump them up and then proceed. or get lucky and test on an allocation basis. or get lucky and have an age weighted formula. or get lucky and have broadly available benefits in which case you have also satisfied the gateway.

you left behind Joshua with all those people who have less than 1 year of service. since there are no HCEs in this group, there is no testing. so he doesn't need to pass through the gateway - in fact he had coupons for getting in free, so he is already waiting for you to get to the other side.

[Guest rickw]

Thanks so much. Now all we have to do is gird up to wander in the wilderness for 40 years....

[Tom Poje]

well, if you are billing on time and charges you will be set for life. job security.