Cb/DC combo gateway or not for otherwise excludable employees

[Jakyasar]

Hi

CB/DC combo, cehcking something resuklted by sofftware.

DC has 401k deferral+NESH+PS

401k+SH eligibility age 21 and no service i.e. immediate entry (this was amended to be effective in 2022 and on - prior was 1 year wait)

PS portion eligibility age 21, 1 year service after 1000 hour service with dual entry

PS allocation 1000+ hours and last day

CB eligibility age 21 and 1 year service after 1000 hours and dual entry

Overall gateway is 7.5% ow which 3% comes from NESH

Q1: EE hired on 8/15/2021 and active as of 12/31/2022 - works 40/week - does this employee get a PS allocation under gateway requirement?

Q2: same as Q1 except EE terminated 10/31/2022 - does this employee get a PS allocation under gateway requirement?

Q3: same as Q1 except EE was hired on 7/5/2021 and active as of 12/31/2022 - does this employee get a PS allocation under gateway requirement?

Thanks

[Bri]

All of those employees sound like statutory exclusions for 2022, and none of them have met the PS eligibility.

Sounds like they'll just get their safe harbor, and like it. 

Unless you're not testing separately.  Then you'd have to hope the document allows for an automatic increase/override to the allocation to cover gateway as needed.  Or, if your group of statutory exclusions includes HCEs you have to test against.

[Jakyasar]

Testing together 

[Bri]

If you're testing together, then the fact that they get safe harbor means they're going to need to get gateway.  So if your plan document won't automatically provide gateway for anyone who fails under its normal allocation provisions, you may need an -11g amendment to increase their benefits.

Fun to tell the sponsor, surprise, your one-year wait provision is basically moot.

[truphao]

all 3 are statutory excludables.  The only I see is with 1,000 and last day requirement for PS component.   If you have any ees who have failed either of those criteria and need to get the gateway (hopefully you do not have any), what would you do?

[Jakyasar]

I was just at ASEA and asked on the podium. The general response was that if anyone gets a top heavy (in my case already getting 3% NESH), they get gateway which I always provide (hopefully I did not misunderstand). But never more than the gateway unless need them to get additional under 11-g which is almost going to be a moot point due to the new amendment rules coming up i.e. can adopt an amendment retroactively to prior year by the due date of the sponsor tax return including extension (this was discussed on the podium). One advantage of 11-g is that you have an extra month for s-corps and partnerships (c-corps and sole-props extended is 10/15 aka 11-g due date anyway)

Again, this is only for participants who worked over 1000+ hours.

My software agrees with me also.

FWIW

[Jakyasar]

Addendum, permissively disaggregated may not require gateway, just remembered.

All my plans I work on are all top heavy and require to be aggregated for testing, no option there.

So my posting applies to my plans specifically.

Just FYI