Logan401 Posted February 25, 2022 Posted February 25, 2022 The plan has each participant in their own allocation group. Is it okay to allocate $0.00 to NHCEs and $0.00 to HCEs and test them on an accrual basis, and test the NHCEs and HCEs receiving the same flat dollar amount on a contribution basis providing that the ratio testing passes?
C. B. Zeller Posted February 25, 2022 Posted February 25, 2022 You can test different groups of employees using different methods if you restructure the plan into component plans. Each component has to separately pass coverage testing. ugueth 1 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
BG5150 Posted February 25, 2022 Posted February 25, 2022 How does gateway work with component plans? Do only those in the x-tested 'plan' get the GW and the contribution-basis plan can be bypassed? And remember, the x-tested component needs to pass via the ratio test, otherwise you'll have to run the ABT for everyone in all component plans together. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
BG5150 Posted February 25, 2022 Posted February 25, 2022 But in the original scenario here, how can that first 'plan' pass coverage? No one is benefitting. is a coverage ration of 0/0 acceptable? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
CuseFan Posted February 25, 2022 Posted February 25, 2022 Gateway, if required, applies to the plan in total - you cannot restructure and say plan A tested on contributions so no gateway and plan B is cross-tested and so only that piece needs gateway. Bri 1 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
CuseFan Posted February 25, 2022 Posted February 25, 2022 However, if the NHCEs getting a $0 have no 401(a) allocation at all - i.e., not benefiting - then they do not need gateway. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
Logan401 Posted February 25, 2022 Author Posted February 25, 2022 The allocation in question is a flat dollar amount, and no other employer nonelective was provided to trigger the gateway. That was going to be a follow up question, so thank you CuseFan for answering it for me.
C. B. Zeller Posted February 25, 2022 Posted February 25, 2022 4 hours ago, BG5150 said: But in the original scenario here, how can that first 'plan' pass coverage? No one is benefitting. is a coverage ration of 0/0 acceptable? A plan (including a component plan) passes the coverage test if it benefits no highly compensated employees for the plan year. 1.410(b)-2(b)(6) acm_acm 1 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
acm_acm Posted March 1, 2022 Posted March 1, 2022 On 2/25/2022 at 1:18 PM, BG5150 said: But in the original scenario here, how can that first 'plan' pass coverage? No one is benefitting. is a coverage ration of 0/0 acceptable? I would go with the "No HCEs benefitting" route over debating whether 0/0 exists or allows the plan to pass.
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now