John Feldt ERPA CPC QPA Posted February 5, 2021 Posted February 5, 2021 Suppose an employer had a 3% safe harbor nonelective 401(k) plan in 2020 with pro-rata profit sharing. In 2021 they adopt a scond plan, a new PS plan, retroactively to 1-1-2020 and it has each person in their own rate group. Can this new plan offset the minimum gateway by the 3% safe harbor nonelective provided to those same participants in the 401(k) plan? Bill Presson 1
Mike Preston Posted February 5, 2021 Posted February 5, 2021 If the plan is aggregated then the contribution counts towards the overall gateway. Luke Bailey, Lou S. and Bill Presson 3
shERPA Posted February 5, 2021 Posted February 5, 2021 Agreed. Bill Presson and Mike Preston 2 I carry stuff uphill for others who get all the glory.
John Feldt ERPA CPC QPA Posted February 24, 2021 Author Posted February 24, 2021 Yes, trying to avoid that aggregation. This plan will pass coverage an nondiscrimination on its own - without aggregation. We just won't offset any gateway required in this plan by any amounts provided in the other plan. In this case, it will still reduce NHCE allocation costs considerably.
Will.I.Am Posted June 27, 2022 Posted June 27, 2022 Why are you trying to avoid aggregation? Can’t you still aggregate and just allocate a profit sharing contribution in one plan but allocate zero in the other? Am I missing something?
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