Gateway testing

I have a controlled group, 3 companies, all three have a safe harbor enhanced match, and 2 of the three companies allocate a pro rata profit sharing contribution.    I'm having problems passing gateway as a few employees work for 2 companies, one with the profit sharing and one that does not allocate one.     

Since the contribution is allocated pro rata, do I even need to run the gateway test.   If I pass the average benefits percentage test, is that all I need to pass?  the plan passes 410b as well.   

if the profit sharing contribution is the same % for all employees you don't have to cross test (even if one group gets zippo - that's no different than having terminees receive zippo)

and if you don't cross test, there is no gateway

Tom,  is the compensation definition does not satisfy 414(s) and 415 comp is used for testing, would that make a difference, thus requiring the gateway test?   

1.414(a)(12) definitions plan year compensation ......414(s)

so as long as the compensation used in testing satisfies 414(s) you are ok. so you can always use total comp even if your comp for allocation purposes is different. Lets suppose you exclude bonuses. if the only people who received bonuses were NHCEs, then testing on an allocation basis using total comp might not pass because the nhces have received a smaller % based on total comp (though if you impute disparity it might still pass) 

I found a note, written by an attorney,  in the file saying gateway testing must be done and pass using 415 because the allocation comp does not satisfy 414s.     I didn't think that would trigger the gateway test but wanted a second opinion.    Gateway is not passing because a few participants worked for two companies, one that made the profit sharing and one that did not.   So using full year 415 comp their contribution percentage is less than 1/3 of the HCE.   

I think if you are using the 5% gateway, then you have to use 415 for the gateway test.

have you run the general test on an allocation basis?

It fails on an allocation basis, passes on accrual basis.