Combo plan - gateway related

Hi

Looking at a combo plan with an existing DC plan.

DC plan effective 2018 had a special entry that let in a part-time employee in 2018. This employee always worked under 500 hours.

Elapsed time method is used for all provisions (I am by no means experienced in using elapsed time)

DC plan has deferrals, non-elective SH and PS. For PS, last day rule is required. In addition, participant must complete period of service under elapsed time - I do not see any provisiosn as to what period is - will be checking with the other TPA.

Adding a CB plan for 2021 (assume all ok for top heavy) which will have 21/1 assumption with 1000 hours for eligibility and accrual. This part-time employee will never be eligible in CB.

Cross-testing both plans. Does the part-timer get gateway? He is in the testing because employed on 12/31 and also has 401k deferral and SH (possibly PS too).

Can he be tested under otherwise exclude (the only one and non-HCE).

Thank you

I'd say yes, he's in your test and needs gateway.  But if you test otherwise excludables separately, then perhaps he's not in a test with HCEs.  No gateway needed in that scenario, just a one-plan THM.

I agree with Bri. Also check the master text for definition of period of service it's probably in there.

Years of Service is Periods of Service if elapsed method is used.

Definitely getting PS allocation, no ambiguity there.

Still trying to understand if this employee is otherwise excludable - OEX - as always worked under 500 hours (just got updated information).

If OEX, then, although getting PS allocation, no need for gateway??? Also, can be tested separately as OEX, right?

Thank you

3 hours ago, Jakyasar said:

Years of Service is Periods of Service if elapsed method is used.

Definitely getting PS allocation, no ambiguity there.

Still trying to understand if this employee is otherwise excludable - OEX - as always worked under 500 hours (just got updated information).

If OEX, then, although getting PS allocation, no need for gateway??? Also, can be tested separately as OEX, right?

Thank you

 

The Plan would need to use actual service as the default, and elapsed service if actual is not readily available.  Otherwise the elapsed service gives him a full year of service every year and he is not excludable.

5 hours ago, Nate S said:

The Plan would need to use actual service as the default, and elapsed service if actual is not readily available.  Otherwise the elapsed service gives him a full year of service every year and he is not excludable.

I agree he is not excludable. The Hallmark of elapsed time is that keeping track of actual hours is irrelevant. So the information in the original post indicating he never works 500 hours is irrelevant.

Makes sense so no OEX option and must provide gateway.

Much appreciated, thank you

The statutory definition in 410(a)(3) references 1000 hours in the 12 months.  I think he's still excludable if you can prove he hasn't done that.  The plan's definition of a year of service isn't relevant for testing, other than who's a participant or not.

Hmmm, now I am confused with different opinions, still researching myself, just cannot seem to find anything that matched my situation.

To be continued.