Gateway

[Becky Schwing]

Physician group - they set up contracts with certain employees to base their overall compensation upon the benefits they will receive in their profit sharing plan (which I'm not fond of).  If the highest HCE rate is 20% is there anyway to give certain NHCE's only a 3% profit sharing contribution based on the employment agreement?  OEE does not work as many our not OEE's.  They also don't want to exclude them from the plan altogether.  Plan is also top-heavy. 

[BG5150]

Are there any HCE at the 3% level? Can there be?

Will you be able to use component plans?

[Becky Schwing]

Are there any HCE at the 3% level? Can there be?

- Yes - some of the HCE's may be at 3%

Will you be able to use component plans?

- Not sure what this means or how it works

[BG5150]

Component plans is one way you MAY be able to get around this (no guarantees).  However (to me) it's a little advanced to explain it in one or two posts.  Is there someone in your office familiar with the process?  

[C. B. Zeller]

You can't use component testing for the gateway, sadly. If you're cross testing any component then the whole plan has to pass the gateway.

There are two alternatives to the gateway. You don't have to satisfy the gateway if either 1. the plan has broadly available allocation rates, or 2. the plan has age-based allocation rates that are based on either a gradual age or service schedule,  or a uniform target benefit allocation.

It is unlikely that you will satisfy either #1 or #2 - this is why most plans just do the gateway.

The only other way out would be if you could test the plan on allocation rates (with or without permitted disparity). Or, I suppose, if it turned out that the employment agreement you mentioned, which promises 3% of pay, was actually a collective bargaining agreement and retirement benefits were the subject of good faith negotiation.

[BG5150]

Darn, CBZ.  I forgot about everyone getting the GW.

I did say MAY help, lol.