cb/nc/sh crossed tested

[abanky]

I have a cb with two year eligibility and a nc ps with two year eligibility.

My SH 3% contributions have a 1 year eligibility. Do I have include the employees who are just receiving the SH 3% in my cb/ps cross testing?

[abanky]

I'm thinking that because they get any contribution, they then become subject to the gateway and might have to get an additional 2% or more

[abanky]

any comments... ideas... theories?

[Tom Poje]

my understanding is that for nonelective contributions you have one nondiscrim test. (though you could have this broken out between statutory includables and otherwise excludables, so you could in effect have 2 tests)

so regardless of that, you have to include everybody who has one year of service, despite the fact that for most of the nonelective you have a 2 year wait.

this would also mean the people receiving the safe harbor would also have to get bumbed up the gateway

I suppose another way of looking at it would be as follows

pretend you have 2 plans

plan 1. two year wait with profit sharing

plan 2. one year wait with safe harbor

you have to aggregate the plans, so you have to use the minimal eligibility requirements between the plans, which is 1 year.

the 'otherwise excludable' rule only applies to ees with less than 1 year of service.

[abanky]

Tom,

Thank you very much.