coverage

[Gary]

say an employer can create a profit sharin gplan where of 100 NHCEs, if they only covered 50 of them it would still pass the non discrimination tests quantitatively.

the questions is:

how might plan doc specify which employees are eligible?

they can't name the 50 employees to be included by name I presume.

So essentially the tp adminstrator would need to obtain job classifiacations (eg. sales, nurses, hourly, salaried, technician, etc.) from the plan sponsor and then determine which type of employees to exclude?

If they included these NHCEs and gave 0% I presume they would be obligated to give them a gateway, thus the reason to exclude them from the plan all together.

thanks

[Tom Poje]

the only people who receive the gateway are those who actually receive a nonelective in some way shape or form.

thus someone who defers and receives nothing else would not receive the gateway.

granted with 50 people the plan might not be top heavy, but if its cross tested and top heavy, then once someone receives a top heavy they must receive the gateway, so that would probably be the reason for excluding a class of people from the plan. But then, as you indicate, you now have to pass coverage.

[chc93]

Also, for the ABPT for coverage, you'll need a reasonable classification. Naming names is not a reasonable classification. I believe specific job classifications that are specific to the company can be a reasonable classification, and the plan document must specify those job classifications that are eligible and those that are excluded.