Leaderboard

Usually such provisions are just blanks that are filled in by the adopter. We always try to use the term "direct" shareholder or owner to eliminate the ambiguity - especially when all the "owners" are lumped into one group. Without that distinction, it's a great way to fail a test.

Agreed. Our document language is flexible in this regard - allows exclusion of HCE's, but as part of that exclusion, allows a "discretionary" safe harbor for the HCE's - only restriction being that it cannot exceed the safe harbor being provided to the NHCE's. A nice feature.

It doesn't. It may render part of it moot, though. Can you see what part?

May I turn the tables? How are you only "leaning" towards that conclusion? What is it that only causes you to lean, rather than fall all the way down?

An employer is only required to provide a safe harbor to each NHCE who is eligible to participate in the plan. [i.R.C. §§ 401(k)(12)(B) and ©. thus, in the Code, as long as the NHCEs get the safe harbor you could arguably give the HCEs something less (assuming your document can handle that) the regs are similar To satisfy the safe harbor matching requirement, each eligible NHCE must receive a qualified matching contribution satisfying either the basic match or enhanced match. In addition, this requirement is not satisfied if the ratio of matching contributions made on behalf of any HCE is greater than the ratio of matching contributions made to any eligible NHCE at the same percentage of safe harbor compensation. [Treas. Reg. § 1.401(k)-3©(1), § 1.401(k)-3©(4)] Thus it appears to be possible to write a document to contain such a formula. so providing the HCEs are receiving at a lesser rate the regs seem to say you can do that (again, document permitting) K2Retire is quite possibly referencing a comment made at an ASPPA conference Assuming that the rate of match for HCEs does not exceed that of the NHCEs (and other such safe harbor requirements), the formula should be possible. [ASPPA Conference 2013 Q and A #22] in light if what the Code says and the regs say, this seems valid, but then any comment made at such Q and A doesn't necessarily represent an actual Treasury position, but at least in this case seems valid to me, but then consider the source (me) expressing that opinion and you might consider that a strike against it ............ again, I think it boils down to 'does your document permit it'. for example, most of the original documents were hard wired at "3 % safe harbor nonelective" but now many say "at least 3%.." because that is permitted under the regs. so can you do it? certainly looks like it does your document allow that? - hmmmm