Cross Tested, 3% SH, and Top Heavy, Gateway Comp

Cross Tested Plan, 3% SH non, Top Heavy, Semi Entry at 4/1 and 10/1

I have an employee with a legitimate participating compensation of 163.01.  Participant was eligible 4/1 and terminated 4/5.

Employee is entitled to 3% safe harbor and then a 2% profit sharing for the year. 

So the Gateway 414(s) compensation would show 163.01 with a 401a allocation of 8.15.  So I need to check to make sure the employee is receiving at least 3% compensation on full year comp for top heavy status.  Employee need 516.80 additional funds to receive top heavy minimum.  Full year comp was 17,498.33.

So here is the rub and the question.  The benefit percentage of the employee in question would be like 300% plus based on the 524.95 401(a) total and compensation of 163.01.  Would you leave it this way?  Or do something different?  

On this plan, there are generally 2 to 3 employees that come in mid year and need a top heavy minimum.  Where everyone else would show a benefit percentage of 5%, the 2 or 3 might show as 5.8%.  Gateway then passes, and then I go to the next steps of making sure the other test pass. 

I just haven't seen a legit participating comp scenario skew the percentage this wildly.

Thanks

In DC Plan TH minimum is only allocated to participants employed on the last day of the year, unless your Plan document has language that makes it more generous.

Lou,

You're awesome.   I knew I was forgetting something!! 

Thanks

Mr. Bagwell, don't forget, though, that the 5% gateway contribution is based on 415 comp (not 414(s) compensation) for the plan year (not the limitation year), but most plans give you the ability to use only post-entry 415 compensation. Such an option is specifically authorized by the gateway regulation, and is, to my knowledge, the sole context when anyone gets to use post-entry 415 compensation (...a delightful fact to know and to amaze your friends and family with during the trivia portion of your next cocktail party). So, you need to include bonuses, etc. in determining the 5% gateway contribution. In contrast, you can leave 414(s)-compliant PS compensation as-is if you are passing the ratio (three-to-one) gateway requirement.