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HCE Carve Outs For Safe Harbor 401(k) Plan


Barry Levy
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Safe K plans can contain provisions where HCEs are not allocated a Safe Harbor match.  Are one or both of the following design allowed?

1) HCE Safe Harbor match is limited to $3,000 ($3,000 is an example)

2) Non-Shareholder HCEs match is limited to $3,000

Thank you  

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4 hours ago, Barry Levy said:

Safe K plans can contain provisions where HCEs are not allocated a Safe Harbor match.  Are one or both of the following design allowed?

1) HCE Safe Harbor match is limited to $3,000 ($3,000 is an example)

2) Non-Shareholder HCEs match is limited to $3,000

Thank you  

Both are allowable.

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Depending on the language in your pre-approved doc (if that is what you are using) that might not be workable).  Ours is sufficiently flexible that it would be allowable such a cap to be implemented operationally, but someone mentioned at one point to treat it like a New Comp allocation and prepare a written certification as to the allocation.

I'm not seeing a super-excellent field in our document to include such a cap. Maybe yours has a good field for it...

Austin Powers, CPA, QPA, ERPA

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