FAQ 360: 401a4--Failing with participants at zero for the gateway test


This plan has immediate entry for 401(k) and 1 year and age 21 for profit sharing with a last day of year rule. The plan keeps failing 401a4 because one participant shows up as a zero in the test.


The gateway box on the a4 test setup screen defaults to giving the gateway to all statuses eligible for the plan, or ABCHMN and 1 hour. If you believe that the gateway contribution should only go to those eligible for the profit sharing, click on this box and change the statuses eligible to ABC and 1000 hours before running the 401a4 test. These participants will show as "N/A" instead of "0". However, be aware that who gets the gateway is a matter of interpretation of the 401a4 regulations, and if there is a safe harbor or top heavy contribution involved going to those employees not in the plan on the last day, they may be entitled to the gateway, no matter how you run the test on ASC.