Top heavy vesting

[Guest Toni Jo]

I have a safe harbor plan that makes an additional profit sharing contribution. They are also top heavy. Can I have a 5 year cliff vesting schedule for the profit sharing piece, or do I need to have the graded vesting schedule?

Thanks

[R. Butler]

Can't have a five year cliff. Generally you will have a 3 year cliff or a six year grade.

[pmacduff]

If the plan is top heavy, you must use a 3-year cliff on the discretionary profit sharing piece. The fact that the plan is safe harbor does not affect the regular ps vesting, but you can't have a 5 year cliff in a top heavy plan. That's not a new rule.

[Lynn Campbell]

Even a safe harbor plan would be subject to top heavy rules if any contributions are made other than safe harbor (like discretionary profit sharing contributions), right?

[R. Butler]

Even a safe harbor plan would be subject to top heavy rules if any contributions are made other than safe harbor (like discretionary profit sharing contributions), right?

Yes.