Is additional contribution required

401k plan with 3% NESH and integrated PS allocation provisions (last day+1000 hours requirement)

The only NHCE terminates during the year with less than 500 hours.

3% NESH is allocated.

Plan fails ABPT but passes ratio testing under 410b.

As the participant got 3% NESH, cannot be excluded from PS, correct?

Gateway is 4.5% i.e. would require 1.5% additional PS allocation, or more to pass 401a4.

Anything I am missing here or misrepresenting?

Just 1 NHCE in the plan along with some HCEs? We’ll, you don’t have to cross-test, but if you decide that’s best, assuming the document does not require you to pass some other way, then yes, the gateway is applied to the NHCE regardless of any allocation requirements that normally apply to profit sharing contributions. Providing the gateway does not mean the nondiscrimination test passes, of course, but if the NHCE is enough years younger than the HCEs, it can be enough to pass overall. 

Why are you having to cross test an integrated profit sharing allocation?

They don’t meet the last day requirement to get the full amount of nonelective needed automatically pass. So to make the nonelective pass, if the plan allows, pick how you want to test and maybe the cross-testing is less expensive. But if so, why did the document have integration anyway - that’s the question. 

John, it is integrated because the owner is younger than the employees but making maximum salary, general test will never pass with trying to keep the cost to the rank&file at a minimum possible.

Then why is “gateway” mentioned in the original post?

It happens that second guessing oneself especially in the midst of reviewing hundreds of documents with a deadline that is in the middle of the tax season.

Thank you all.