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  1. ldr
    Good morning to all, A client, which happens to be an Indian reservation, has a commercial entity that sponsors an ERISA covered 401(k) plan. That commercial entity has no HCEs. The employer decides that overall for 2017, it will contribute 5% as a profit sharing contribution for the year. Per the plan document, profit sharing is totally discretionary and is supposed to be allocated on a salary ratio basis. However, each division within the company is responsible for being a profit center and one division says it doesn't have the resources to make any contributions for 2017. This means that about 2/3 of the employees get a 5% of pay contribution and 1/3 of the employees get nothing. Again, there are no HCEs. Top Heavy status is not an issue. Passing 410(b) coverage testing is not an issue. Does anyone see any problem with this? Is it permissible for the 1/3 to get nothing in profit sharing for the year? Your thoughts and suggestions are always appreciated! Thank you.
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