compensation in safe harbor plan

[betheeg]

if a plan excludes compensation prior to participation for safe harbor 401(k) contributions as well as discretionary profit sharing contributions, do i have to use full year comp for non-dicrimination testing?

[jaemmons]

Check your plan's definition of IRC 414(s) compensation. Some documents, as Mike Preston eluded to in another thread reply, allow for the plan to use different comp definitions for different testing purposes (e.g- adp/acp, nondiscrimination a4 testing, etc.)

[jquazza]

414(s) comp is defined in the code, not in the plan document. What you probably mean is that the plan document defines what comp to use in the tests. If the document is flexible, both "date of entry" comp and full comp satisfy 414(s), so use whatever suits the employer objectives best.

/jq

[jaemmons]

jquazza,

If the plan document is defining the comp to be used for nondiscrimination testing then it is defining the plan's 414(s) compensation. Yes, the general definition of what 414(s) comp is defined within the Code, but a plan's specific definition of this compensation is unique and is most of the time defined in the plan document. Some prototypes and even some volume submitter documents do allow the employer to define the 414(s)comp used for adp, acp and (a)(4) testing separately.