Safe Harbor Matching

[Guest PAINPA]

I have an employer who would like to implement a Safe Harbor Match Plan. The characteristics of the employer are that most of the employees are very young or very old (e.g. fast food type of restaurant). The owner feels that no one (very minimal) will participate.

I plan on getting every eligible participant signature electing not to defer. Not only on the vendor enrollment but a customized one I will design detailing the plan. What else should I be concerned with the possibility of 2 HCE's and 2 NHCE's that will participate and about 25 that will have no interest?

Comments/Suggestions?

[g8r]

I think you're taking the right step - which is documenting that employees were informed about the plan and declined, in writing, to participate.

I always joke that with an ADP/ACP safe harbor matching plan, you should hold enrollment meetings at 5:00 on Friday and don't serve food. Of course if none of the NHCEs participate, I'd be concerned (as you are) about the IRS challenging this. And, the only challenge would be as to whether employees were informed about the plan and whether they had the opportunity to defer. Documenting this up front is very prudent.