Safe Harbor / Different Eligibility for 401k and PS

[CLE401kGuy]

Plan has different eligibilities for making elective contributions (date of hire, no age requirement) and profit sharing age 21, 1 yr of service, monthly entry dates.

the plan is a discretionary safe harbor and the client has elected to make the safe harbor contribution to satisfy the ADP test for the '11 plan year

4 people enter the plan during the '11 plan year - satisfying eligibility for 401k - but not for PS since they were all hired in '11 -

The safe harbor contribution goes to ALL participants including the 4 who came in during the '11 PY and were hired in '11.

The plan is also cross tested - if the highest HCE receives 12% and gateway requirements are triggered, must the 4 who enter the plan in '11 also get the 1% PS, if so, wouldn't the plan need to be amended to allow the 4 to receive the allocation of PS since they did not meet PS eligibility requirements?

found my answer further in the doc - gateway is triggered and throws out the other requirements in order that it can be met

[Lou S.]

Standard caveat of read the document to make sure of your groups.

But can't you test your otherwise excluables seperately and presumably no HCE will be in that group so your gateway for that group would pass.

If you are testing all together for some reason such as to pass 401(a)(40 testing, than yes they would need the 1% to satisfy the gateway, does your doc have language to "top up to meet gateway"? If so I don't think you'd need amendment, if not I think you do.

[John Feldt ERPA CPC QPA]

The rules allow the OEE group to be considered as part of a separate plan and thus not entitled to a gateway (except if TH, the TH minimums still apply).

I'm surprised your document requires the OEE group to get the gateway.

[Bill Presson]

Plan has different eligibilities for making elective contributions (date of hire, no age requirement) and profit sharing age 21, 1 yr of service, monthly entry dates.

the plan is a discretionary safe harbor and the client has elected to make the safe harbor contribution to satisfy the ADP test for the '11 plan year

4 people enter the plan during the '11 plan year - satisfying eligibility for 401k - but not for PS since they were all hired in '11 -

The safe harbor contribution goes to ALL participants including the 4 who came in during the '11 PY and were hired in '11.

The plan is also cross tested - if the highest HCE receives 12% and gateway requirements are triggered, must the 4 who enter the plan in '11 also get the 1% PS, if so, wouldn't the plan need to be amended to allow the 4 to receive the allocation of PS since they did not meet PS eligibility requirements?

found my answer further in the doc - gateway is triggered and throws out the other requirements in order that it can be met

1. Why would you have the immediately eligible people also receive the safe harbor? Since you can test them separately, you will only fail if you hire a new owner.

2. If the plan is top heavy, you can ignore 1.