FAQ 559: Budget--New comp-contribution going to terminated employees

Problem: I am trying to run calculations to calculate the amount the plan will need to contribute to pass 401(a)(4) in a new comp case. This plan is new this year. There are 3 people who are not eligible for the employer contribution because they are terminated. When I run the budget routine for the system to calculate the amount necessary to pass the 401(a)(4) test, it is giving these participants a contribution and not giving a contribution to one other employee.

Solution: The employee who is not receiving a contribution is a status "S" because she is not eligible until 7/1/2007 based on the primary eligibility coding. If you want to force her to be eligible, you can change her entry date to 7/1/2006 and make her a status "C". However, if they are actually adopting the plan for 12/31/2006 and they want to include her, they may want to change eligibility to 6 months with end of year entry. The other three are coming in because of the gateway contribution, which is defaulted to go to all employees employed during the year. Change the status codes eligible for the gateway from ABCHMN to ABC. You may also want to change the hours required on the gateway from "1" to "1000".