Cash Balance and Gateway Test

[retbenser]

I have a Cash Balance Plan that has different compensation credit for different employee groups.

There is no DC plan involved.

Is it correct that there is no gateway test to comply?

Thanks.

[AndyH]

I have a Cash Balance Plan that has different compensation credit for different employee groups.

There is no DC plan involved.

Is it correct that there is no gateway test to comply?

Thanks.

Yes

[Tom Poje]

unless you do something silly and convert the contribution credits to an equivalent allocation amount and cross test on an allocation basis?

[SoCalActuary]

Well, you might want to read the rules.

Especially the ones about plans where the benefits are primarily from the DB plan.

Let's see here: your DC benefit is .... ZERO.

Yeah, that probably means that the benefits are primarily from the DB plan.

[Tom Poje]

actually the gateway rules only kick in for a dc plan that is crosstested by itself or in combo with a DB plan. silly me.

if you cross test a DB plan (on an allocation basis) you would never get to a point of 'primarily DB' as no such provision exists under 1.401(a)(4)-8©

I've never seen a DB plan 'cross tested' , anyone have an example in which the test is better on an allocation basis than on an accrual basis?

[SoCalActuary]

actually the gateway rules only kick in for a dc plan that is crosstested by itself or in combo with a DB plan. silly me.

if you cross test a DB plan (on an allocation basis) you would never get to a point of 'primarily DB' as no such provision exists under 1.401(a)(4)-8©

I've never seen a DB plan 'cross tested' , anyone have an example in which the test is better on an allocation basis than on an accrual basis?

Yep. Younger owner, older NHCE. Test at 8.5%, payout at 417(e) rate. Use the whipsaw in reverse.