Gateway for Otherwise Excludable Employees

[LJI]

I'm following through the information in Chapter 11 Section XIV of the EOB to determine if a plan can make use of disaggregation to avoid giving the gateway contribution to employees subject to statutory exclusion.

The plan I'm working on has 6 month eligibility for all parts of the plan, quarterly entry. There is a 1000-hour requirement for profit sharing, but no last day rule. The plan provides the 3% Safe Harbor non-elective and seeks to fund additional discretionary contributions beyond this. All employees are in their own allocation group for profit sharing.

The examples presented in the EOB incorporate the last day rule and seem to imply that even though there are employees that have not met statutory eligibility requirements, because they are employed on the last day they must receive an additional gateway contribution. However the EOB does not state this explicitly in explaining the process, only implying that the whole otherwise excludable employee group does not have to be Gateway tested.

Can anyone clear up whether the last day rule is critical to being able to take advantage of this disaggregation to avoid giving Gateway to otherwise excludable employees? Can both active and terminated employees be excluded from receiving Gateway if they haven't satisfied statutory eligibility? Can my plan that does not have the last day rule exclude all otherwise excludable employees from the Gateway Test?

[Mike Preston]

No, it is not. Yes, they can. Yes, it can.

[LJI]

On 3/9/2018 at 1:22 PM, Mike Preston said:

No, it is not. Yes, they can. Yes, it can.

 

Thanks, much appreciated