Gateway Minimum

[LMD1]

401(k) Plan - 1 year of service dual entry for non-elective PS and Safe Harbor, 3 mos of service monthly entry for deferrals. Plan is top heavy. Client is allocating a profit sharing so we must meet top heavy minimum requirements. Plan Compensation is date of entry for each source.

ee#1 - hired 4/1/13 - enters plan for non-elective ps and safe harbor 7/1/14. Receives combined profit sharing and safe harbor on 1/2 year comp (7/1 - 12/31/14) of 5%. Gateway testing on 1/2 year compensation passes. In addition, making sure it meets 3% top heavy on full year comp.

EE#2 - hired 4/1/14 - not eligible for non-elective profit sharing or safe harbor.

Since plan is top heavy and eligible to defer, must receive top heavy 3% on full year comp. Now that top heavy is allocated, must test gateway, Correct?. What compenation would I use for the gateway portion since eligible compensation for non-elective ps and sh is $0 since not eligible. If I use comp from participation date for deferrals 6/1/14 - it doesn't seem fair to ee#1.

What compensation should I test gateway for EE#2? Thanks!

[Tom Poje]

plan could be tested in 2 parts (otherwise excludables tested separately)

I am assuming there are no HCEs in the otherwise excludable group, so this test could be done on an allocation basis, but then since it is not cross tested, no gateway needed. of course, with no HCEs in the group no testing is even needed.