Cap on HCE for Profit sharing? and New vesting Rules?

[Guest Michael Anderson]

1. Can an owner put a cap on the compensation used in determining the Profit Sharing contribution, that will only affect himself, even though they are using a standardized document that does not address this issue??

2. The vesting for matching contributions is restricted to a 3 year cliff, but can the Plan still allow a 5 year cliff on discretionary contributions?

Thanks!

[Blinky the 3-eyed Fish]

1. Yes, but you might take your document out of reliance with the standardized prototype.

2. A 5-year cliff is permissible for nonelective contributions if the plan is not top heavy, otherwise, as cliff vesting goes, 3 years is the most allowable.