Sole Prop. with one employee

[FJR]

Anything wrong with a sole proprietor with one employee doing the following:

In 2002, Safe Harbor Match at 100% first 4. Sole Prop. puts in $11,000 and employee puts in $0.00. Sole Prop. gets the $8,0 00 Safe Harbor match(NEI over 200K). Meanwhile, the employee so far Still gets $0. Anything wrong with this? Under EGTRRA if I read it correctly, this is OK? I assume a P/S contribution can also go in.

[Guest RJM]

If you add Profit Sharing, the NHCE will have to get at least 3% of annual compensation (top heavy minimum).

[Richard Anderson]

You can also put in a discretionary match, up to 4% of comp.

[FJR]

Richard, good point. So what you are saying, if you put in a discretionary match, in addition to the safe harbor, you can still potentially get away with putting in $0.00 for the participant. Based on my example above. Just doesn't seem right...