FAQ 353: 401a4--Cross tested plan with dual eligibility. Who is eligible for top-heavy and gateway?

Problem: We have a cross-tested 401(k) plan with different eligibility for deferrals versus employer contributions. It is top-heavy, so anyone eligible to defer has to get the top-heavy minimum. If they get the minimum, they then have to receive the minimum gateway under the cross tested allocation. However, because they are not eligible for employer contributions, they do not show up on the 401(a)(4) test. Is that right? Are we coding something incorrectly?

Solution: All participants eligible for deferral or profit sharing should be on the test. The system knows this because of the coding in the: - Benefit Limits (BENLIMIT) screen indicating it is a 401(k) - Top Heavy Minimum (TOPHMINM) screen indicating who gets the top-heavy minimum - Deferral source spec coding that groups 346785AB with 1 hour are eligible - Profit sharing source coding - Eligibility (ELIG) screen indicating that deferral is subject to Primary eligibility (mandatory) - Secondary Eligibility (SECELIG) screen indicating that profit sharing is subject to Secondary eligibility Also, when you are setting the parameters for the gateway minimum in the a4 setup, be sure to select to use "Primary" eligibility in the bottom right, which is the default.