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What about capping only the highly compensated employees? The SH match only requires the NHC to receive the minimum amounts already discussed. Realistically, no NHC could ever get to the $10,000 cap anyway, so this would only cap HC's, which appears to be what is intended? Am I missing something? (quite likely...) I'm assuming there is no top paid limitation group issue in effect here.

I would say there is no point to having those choice 99.99% of the time in a PSP for the reasons you outlined.

^ but it is good advice.

You have it correct. As for advice I suppose not allowing loans or at least loan defualts is out of the question.

well, I certainly don't think the 'intent' of safe harbor plans would be to have this situation arise. Arguably, such a situation could lend itself to the possibility an HCE would receive a match at a higher rate than an NHCE, which of course is forbidden. For sure it would happen if you based the rate of the definition of comp on which one could defer. oh crap. I just realized. this is post number 5330 for me. does that mean I have to fill out a form? Hopefully at least a few of my posts have been informative.