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3%SHNEC for NHCES and 9%PS for Owners ok?


cheersmate
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Safe Harbor 401k Profit Sharing Plan provides:

401k+Catch-up for all

3%SHNEC for all NHCEs only

Discretionary PS, each Participant own rate group

25 HCEs, 2 are owners

100+ NHCEs

Employer would like to contribute the following:

2 owners 9% PS

Remaining HCEs 1% PS (Plan is NOT TH)

NHCES only the 3% SHNEC, 0% PS -- this satisfies the G/W minimum

Can this be done or must the NHCEs receive "some amount of" PS?

 

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5 minutes ago, Mike Preston said:

There is no reason other than a failed 401a4 test that would preclude this.

Mike - thank you for your reply

It passes general testing. My concern was whether it was necessary that the NHCEs receive a PS (specifically) allocation rate... was not clear to me the 3%SHNEC covers it.

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  • 9 months later...
On 3/13/2019 at 4:58 PM, Mike Preston said:

There is no reason other than a failed 401a4 test that would preclude this.

Mike -

If you can refresh by reading the above.. Assuming it passes a4... could the 2 owners receive 6% PS and in addition to the NHCEs receiving zero PS could the remaining non-owner HCEs receive zero PS (i.e. they receive only the 3%SH)?

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  • 11 months later...

OK, you are asking, essentially, whether your plan may use the 3% safe harbor nonelective contributions to satisfy, or help satisfy, the general test - including the minimum gateway requirement.  
I think this is OK, that Regs. sec. 1.401(a)(4)-8(b)(3)(vii) says you may do this.  This reg incorporates Regs. sec. 1.401(a)(4)-2(c)(2)(ii), which says that "[A]llocations taken into account" for the general test "include all employer contributions ... that are allocated to the account ... of an employee under the plan for the plan year ... ." 

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