Guest PRafferty Posted January 25, 2002 Posted January 25, 2002 We have an employer interested in adopting Safe Harbor Match and wants to change the minimim deferral contribution percentage currently listed in the adoption agreement from 1% to 3%. Would he be able to do this or would this be discriminatory against the NHCE's?
jaemmons Posted January 25, 2002 Posted January 25, 2002 You need to look at the number of NHCE's and HCE's who defer 3% or more. It may be discriminatory if less than 70% of all eligible NHCE's defer at least 3%. Without having all of the facts and circumstances, I would say look at the current availability of the increase, based upon current deferral rates.
Medusa Posted January 25, 2002 Posted January 25, 2002 I would have said that this was prohibited by Notice 98-52.
wmyer Posted January 28, 2002 Posted January 28, 2002 I agree with Medusa. See 98-52 V.B.1.c.ii ("Restrictions on Amounts of Elective Contributions") and 2000-3 Q-3 & A3. The only minimum deferral % allowed to be required in a Safe Harbor 401(k) is 1%. W Myer
jaemmons Posted January 28, 2002 Posted January 28, 2002 I concur. I overlooked the "safe harbor" in the original post.
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