Safe Harbor Plan compensation

[Guest cxs]

Can commissions be excluded from the definition of compensation (for calculating contributions) in a Safe Harbor plan with 401(k) and employer non-elective?

Thanks -

[Blinky the 3-eyed Fish]

Maybe. Excluding commissions takes the definition of compensation away from one that automatically satisfies 414(s). So, you would need to run the compensation ratio test to see if the commission-less compensation passes. If it does, then it is deemed to satisfy 414(s). If it does not pass, then you wouldn't have safe harbor allocations and would have to pass nondiscrimination testing using a definition of compensation that does satisfy 414(s).

[four01kman]

If only HCEs get commissions, then you shouldn't have a problem excluding them from the compensation definition. Otherwise, Blinky is correct.