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You asked this same question yesterday. But yes, the 3% nonelective safe harbor contribution can be used toward satisfying gateway. Mind you, it only counts TOWARDS gateway, it doesn't necessarily eliminate it. For example, if gateway for the plan in question is 5%, then you'd still need an additional 2% contribution on top of the 3% safe harbor.

Yes, the 3% can be used toward gateway. No, the safe harbor match cannot be used toward gateway.

Yes. In fact, you could set up a plan to just cover a single NHCE and have no testing. We have done things like this quite often for fast food operations, etc. The owners aren't worried about participating, so we exclude them (and all other HCEs if they have any) and cover only the managers and assistant managers at each location. Generally those people are paid pretty well, but don't qualify as HCEs.

Mr Dragon, You are asking questions that take much experience and many books to explain. With that said, keep asking questions and digging into the website for answers. I'll drop some hints: matches don't offset the gateway. If you design a plan to be Safe Harbor compliant, (many rules come into play) you may or may not be doing ADP/ACP tests. Again, depends on the design. If you add a profit sharing to a Safe Harbor plan, Top Heavy will come into play. If you add a profit sharing with allocation conditions to a 3% Safe Harbor plan, the allocation conditions are worthless because you have to add the conditioned out employees in the gateway test. Otherwise, you won't pass gateway. Please don't be offended when I say "find an seasoned pension pro that you work with and pick their brain". You are asking good questions, but difficult questions at the same time.

In my opinion, you need to have more to go on than "the market was down." Have the client or investment institution provide you with the rate of interest those participants would have received had the matching contributions been invested in their accounts (assuming participants give investment direction, those rates would likely be different for each participant). It's possible (although maybe not likely) that one participant was invested in a very conservative investment vehicle and had a small positive return. If all of those accounts had investment losses, the safest thing to do may be to not allocate interest on the late matching contributions (rather than reducing the matching contributions for the loss, although there may be validity to that argument). There's no requirement to allocate interest if there is none. We have done a few corrections where we did not include interest because of negative returns during the period of failure. We always document an EPCRS correction with a memo to the file that describes the failure; gives a detailed description of what we did to correct the failure, including the process, calculations, and other considerations, if any; and recites which sections of EPCRS we relied on in making the correction. And we attach any pertinent calculations or documentation (such as something showing what the interest rates were for each person). This is very helpful for the client to have in case of audit so they can show that they appropriately fixed an operational failure. It's also helpful in cases where there are personnel changes in a company and the new people are trying to figure out what their predecessors did.

Might your inquirer consider a multiple-employer plan under which a contractor might be a participating employer?

If they have d-letters, looking at the letters might indicate whether they were on prior 5-year cycle for IDP which has since gone away or are pre-approved with modifications on a 6-year cycle. I agree not much has been going on in DB amendment world and these may be OK, but it would be prudent to do a detailed review prior to going down termination road.

I do not think the spousal protections afforded by ERISA that attach to qualified plan participants subsequently apply to the benefits inherited by their beneficiaries. For example, if my married daughter is my beneficiary, upon my death there is no requirement to name her husband as her beneficiary of my inherited account. However, if she fails to designate a beneficiary then the plan's default will apply, which could be her husband. Also, be mindful of the new RMD requirements.

From the IRS Form 5304 model SIMPLE: V. Duration of Election This salary reduction agreement replaces any earlier agreement and will remain in effect as long as I remain an eligible employee under the SIMPLE IRA plan or until I provide my Employer with a request to end my salary reduction contributions or provide a new salary reduction agreement as permitted under this SIMPLE IRA plan. As long as the employee remains eligible, his/her latest election should continue and there is no need to re-enroll unless the employee is making a change.

Tinman, since 401(a)(12) and 414(l) don't apply, you have no federal rules on how you handle any differences in funding levels in the constituent plans. You'll need to look to Nebraska law (if there is any on point, which I doubt) and be sensitive to the issue.

End of the year is best, as advised by both of the gentlemen above. No reason that make sense to contribute a Non-Elective on a payroll basis.

The Safe Harbor will pass ADP, you don't need to run. The Safe Harbor may pass ACP without running if you meet the requirements in the code. Making any additional employer contribution (such as profit sharing) will end the "deemed not top heavy exemption" for the year you make an allocation. Match can not be used to meet gateway but can be used off set TH minimum contribution if the document allows. As Bagwell notes these are broad questions that have long answers with sometime the answer being "it depends".

Contributor Zeller is spot on! Another way to think about this is that one does not even know if money has to be returned until the Catch-Up (if the P is eligible for one and it is in the document) is utilized.

I've never seen a non elective contribution calculated on a per pay period basis.

To use a numerical example, assume you have 2 participants over the age of 50, both over the 401(a)(17) limit of $305,000 for 2022. Part#1 defers $27,000 (the 402(g) limit + the catchup limit) Part #2 defers $20,500 (just the 402(g) limit) For 2022 they both have an ADP of 6.72% ($20,500 / $305,000 - since the catchup is ignored) Now suppose that after running the ADP test it is determined that they each need a refund of $3,000 to pass the testing. Part#1 has already used up all of his catchup limit and would receive a $3,000 (+/- earnings) refund. Part#2 has not used any catchup. Since the $3,000 refund is less that the $6,500 limit, all $3,000 would be recharactherized as catchup and he would receive no refund. The Plan does not rerun the ADP test after these corrections.