DB/DC Combination - Gateway Eligibility

[emmetttrudy]

I know there are several strings on this topic but I couldnt find one that dealt with this situation exactly, and I always have to review these requirements.

Assume for these purposes the combination of plans is NOT top heavy. The CB Plan has a 1,000 hour accrual requirement for a CB credit. The 401k PSP has a 1,000 hour and last day requirement for profit sharing. The plan is not safe harbor (just deferrals and profit sharing).

Is this correct?

Employee who does not work 1,000 hours but is active on last day of plan year does not need to receive an employer contribution in the 401k PSP.

Employee who does not work 1,000 hours and terminates during the year does not need to receive an employer contribution in the 401k PSP.

Employee who works 1,000 hours and terminates during the year does not need to receive an employer contribution in the 401k PSP.

Now, assume the same things above, except the Plan IS top heavy.

Is this correct?

Employee who does not work 1,000 hours but is active on last day of plan year must receive the TH minimum, and thus the GW.

Employee who does not work 1,000 hours and terminates during the year does not need to receive an employer contribution in the 401k PSP.

Employee who works 1,000 hours and terminates during the year has accrued a DB benefit, thus must receive a TH minimum, and thus must receive a GW.

[emmetttrudy]

For the Not Top Heavy Portion the last one should actually be the participant must receive the GW, since they worked 1,000 hours and accrued a benefit in the DB Plan they must get the GW in the 401k PSP.

[AndyH]

You have managed to provide both too much and too little information in the same post.

Principles -

Gateway - if you receive an employer contribution in either plan and the plans are aggregated and tested on a benefits basis you must provide the gateway in one or both or through a combination of plans, following the plan document conditions for allocations first. And assuming exemptions such as primarily DB in character do not apply.

Top Heavy is an employer contribution that generates the need for a gateway just like any other ER contribution.

An employee eligible to defer in a top heavy K plan must get a top heavy allocation which creates the need for a gateway if relevant.

Maybe this helps?

[BG5150]

An employee eligible to defer in a top heavy K plan and employed at the end of the year must get a top heavy allocation which creates the need for a gateway if relevant.

I added something.

Also, for a first-year participant, the TH might be more than the gateway, as the GW can be based on participation compensation and TH is based on full-year pay. So, someone might have to get more than the gateway even if they are not getting a PS.