Guest jim williams Posted July 29, 2003 Posted July 29, 2003 We are the TPA for a medical practice where the doctor owns two separate offices. Both offices have 401(k) plans, however, only one has safe harbor provisions. I understand when performing the ADP/ACP tests both plans are aggregated as one plan. My question is whether the safe harbor contribution is required to be made on behalf of the employees of the nonsafe harbor 401(k) plan?
Tom Poje Posted July 29, 2003 Posted July 29, 2003 Interestingly enough, the proposed regs that just came out would forbid aggregating a safe harbor with a non safe harbor. As I understand it, you do not necessarily have to aggregate the plans anyway, though you do have to aggregate the HCEs deferrals.
Guest jim williams Posted July 30, 2003 Posted July 30, 2003 I would aggregate the HCEs' deferral rate and use this rate for both plans when calculating the ADP for each plan?
Tom Poje Posted July 30, 2003 Posted July 30, 2003 you have to aggregate both deferrals and match. Read notice 98-52, IX B 2- which deals with HCE, 2 plans only one of which is a safe harbor. it talks about the dangers of the match - it could cause the HCE to receive a greater rate of match
Guest jim williams Posted July 30, 2003 Posted July 30, 2003 In my scenario, if the Dr is the only HCE and he is only contributing to the safe harbor plan, but is eligible to contribute to the nonsafe harbor plan, would you still have to aggregate his deferral/match contributions? His ADR for plan A is 5.5%, for plan B is 0%. If aggregated his ADR for plan A is 5.5% and for plan B is 5.5%?
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