Last Day rule (?) for Safe Harbor contrib

[Brian Gallagher]

Can there be a Last Day rule for Safe Harbor match or non-elective contribution?

[Guest Ddalk]

The 'last-day' rule requiring a participant to be employed on the last day of the plan year to receive a safe-harbor allocation is not allowed for either the employer match or the nonelective contributions.

[Appleby]

Ddalk

Can you provide a cite? I though that the last day requirement could not be applied only if the employer elected the 3 percent nonelective contribution formula

[KJohnson]

Notice 98-52 provides

a. In General

The matching contribution requirement of this section V.B.1 is satisfied if, under the terms of the plan, safe harbor matching contributions under either the basic matching formula or an enhanced matching formula described below are required to be made on behalf of each NHCE who is an eligible employee.

98-52 makes it clear that the term "eligible emloyee" will be defined the same way as in the 401(k) regs--anyone eligible to defer...

Except as provided in this section IV, any term used in this notice that is defined in Notice 98-1 or the regulations under sections 401(k) and 401(m) has the same meaning as in Notice 98-1 or those regulations. For example, the definition of "plan" in section 1.401(k)-1(g)(11) applies for purposes of this notice

[Guest PORTE]

So, I may not be clear here, but it was my understanding that if you used the safe harbor match or the safe harbor non-elective you could not use the "last day of the year" rule, but you could use the last day of the year rule if you added a non-elective profit sharing contribution to the mix and used the rule for that contribution only?

[R. Butler]

You are correct.

[Guest PORTE]

Thanks, I was getting confused in the discussion. I wanted to make sure that the last day rule was still available for any "non-safe-harbor" non-elective contr's. My reading of 98-52 didn't bring that problem to light and I'm glad it's not an issue.