I am starting to do some 12/31/06 CB/PS combined plan coverage and nondiscimination testing and it seems I'm a little rusty. I have a calendar year plan with a participant that terminated employement during 2006 with only 300 hours. The PS plan provides a 3% safe harbor PS contribution to avoid ADP testing. Since there cannot be a last day or hours worked requirement on that SH PS contribution then it seems like that participant would then be benefitting for the purpose of receiving a gateway minimum. I don't see a way around the 3% SH plus the gateway but it is weird t give a gateway to someone that can be excluded for 410(b) and 401(a)(4) testing because they are terminated with less than 500 hours. What am I missing?

excluding terminees with less than 500 hours only applies to participants who do not benefit.

thanks, i overlooked that.