Gateway and Rounding

[justatester]

I have a plan that made a contribution to participants based on satisfying the gateway using the 3 times ratio. The contribution they made to participants was as follows. When calculating the contribution for participants, it was calculated out to three percentage decimal places as shown below.

Calculated contribution Illustrated rounded several places

Lowest NHCE% .635% .6349543249

Highest HCE% 1.905% 1.9050052640

Using the numbers above, it would appear that the plan satisfies Gateway, since the numbers in the first column satisfy the 3x1 ratio. The numbers in the second column would also appear to satisfy gateway if rounded to three decimal places.

When using our testing software, the system is rounding to two decimal places and several participants with the contributions shown in the far right column are ending up as .63% for the lowest NHCE with a resulting failing gateway test.

My question is this, is there any requirement that gateway testing be rounded to two decimal places? I have researched this and am unable to locate such a requirement any thoughts our guidance would be greatly appreciated.

[Tom Poje]

if I had someone making $9,840

at .635% he would receive 62.48 (not 62.484) and that fraction of a penny makes the difference.

so as % of pay they received only .63496%. did he receive at least 1/3 the hce rate of 1.905 as required by the regs?

no, and I don't think you can say "if I round.."

just give them an extra penny, good grief.

would the IRS push the issue for lack of a penny? who knows.