LarryDavid Posted July 6, 2011 Posted July 6, 2011 I am allowed to run separate gateway test for Otherwise Excludable Employees? I know for Component plans the answer is No. But I'm hoping I can exclude a large number of 2010 hires from having to receive a gateway allocation for a plan that is failing (even though some of these employees did receive an allocation in 2010 as part of a plan with immediate eligibility).
Tom Poje Posted July 7, 2011 Posted July 7, 2011 the regs say you can only cross test if you provide the gateway. If I have a group of employees I am treating as otherwise excludable, I could test them on an allocation basis (not cross testing that group). Chances are there is no HCE in that group so that group would pass. Since I am not cross testing that group I would not have to provide the gateway to that group.
LarryDavid Posted July 7, 2011 Author Posted July 7, 2011 the regs say you can only cross test if you provide the gateway.If I have a group of employees I am treating as otherwise excludable, I could test them on an allocation basis (not cross testing that group). Chances are there is no HCE in that group so that group would pass. Since I am not cross testing that group I would not have to provide the gateway to that group. Thanks Tom. In my case, I actually do have a small number of HCE's in the disaggregated group (since I am using semiannual eligibility and a few late 2009 hires actually made over $110K in 2009); therefore I will have to test that group on a benefits basis as well. Thankfully the highest allocation rate for the HCE's in this group is very small, and each NHCE in this group is above 1/3 of the highest amount. So it looks like I'm good and can at least save my client a little cash for this group. Thanks again.
Guest Quagmire Posted July 13, 2011 Posted July 13, 2011 the regs say you can only cross test if you provide the gateway.If I have a group of employees I am treating as otherwise excludable, I could test them on an allocation basis (not cross testing that group). Chances are there is no HCE in that group so that group would pass. Since I am not cross testing that group I would not have to provide the gateway to that group. Thanks Tom. In my case, I actually do have a small number of HCE's in the disaggregated group (since I am using semiannual eligibility and a few late 2009 hires actually made over $110K in 2009); therefore I will have to test that group on a benefits basis as well. Thankfully the highest allocation rate for the HCE's in this group is very small, and each NHCE in this group is above 1/3 of the highest amount. So it looks like I'm good and can at least save my client a little cash for this group. Thanks again. Link to cross-testing regulation.
AndyH Posted August 25, 2011 Posted August 25, 2011 therefore I will have to test that group on a benefits basis as well. Why? I think you could test them on a contributions basis if that works.
LarryDavid Posted August 26, 2011 Author Posted August 26, 2011 therefore I will have to test that group on a benefits basis as well. Why? I think you could test them on a contributions basis if that works. You are correct, and that is what we wound up doing.
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