Is it necessary to have a catch-all group just for gateway?

[Trekker]

Cross-tested Plan requires "1000 hours/last day employment" to share in Employer PSP contribution. There is also a 3% Non-Elective Safe Harbor contribution.

Participant Bob terminates during the year with less than 1000 hours, but he is benefitting under the Plan due to the safe harbor.

The Plan does not contain an allocation group solely for participants who share in the safe habor or top-heavy (i.e., benefitting under the Plan) but who do not satisfy 1000 hour/last day requirements (i.e., the Plan does not have a catch-all group).

The Plan DOES have the gateway provision that "the minimum allocation rate for Non-Highly Compensated Participants shall be the lesser of....." and then goes on to state the 5% or 1/3 rule.

Bob did receive the gateway allocation.

Question: Is there a plan document issue since there is no catch-all group defined? Bob's group was the staff group. Active participants in the staff group received more than the gateway, but Bob only the gateway.

Make sense to anyone?

Thanks.

[Belgarath]

Are you sure the language isn't hidden in there somewhere? I haven't seen an EGTRRA document that didn't provide for this. Something along the lines of, "The Gateway contribution will be allocated without regard to any allocation conditions otherwise applicable to Employer contributions under the plan" ...

If there isn't such language, there should be.

[BG5150]

I put a group like that in my system, even though it's not in the document. It's easier to allocate that way in Relius sometimes.

[Tom Poje]

agree, usually the document language should cover.

for example, ignoring the cross testing feature. lets say the person was active and worked less than 1000 hours, but the plan was top heavy. if the document required 1000 hours for a contribution would you say he gets nothing or receives the top heavy? top heavy language overrides the allocation requirement.

gateway language is usually worded something similar, if you have received a non elective then you have to receive the gateway

[Bird]

If it is spelled out clearly in the document, then I don't see a problem. He's in the group but he's not sharing, and gets the special allocation under another plan provision.

I'm not sure about the "most documents have this" or "should have this" comments. (I think) documents just have to have language that the plan has to comply with 401(a)(4) and the regs thereunder. If I'm reading ours correctly, Ft. William does it that way (there is also a provision that the administrator can waive the allocation requirements under certain circumstances, which usually takes care of it). If they don't have specific language about how to do that, then a retroactive amendment might be needed.

[ETA Consulting LLC]

Good points. The first rule is that you must contribute under a 'definitely determinable allocation formula'. This simply means that any contribution made must be supported by the terms of the plan. You cannot arbitrarily decide that you want to contribute more (even if the pass a test) without first ensuring the document is written to support that contribution. Many prototypes I've seen would have a box to check; stating that in the event the plan is cross-tested then those NHCEs would be eligible for the gateway where they otherwise failed to meet the accrual requirements for additional contributions.

At the end of the day, it's a issue of knowing how to interpret your document. I'm not saying this sarcastically, but to express the appreciation of how complex (or simple) this issue may be.

Good Luck!

[Trekker]

Thank you all for your responses!