Safe Harbor match & top heavy

[Santo Gold]

Small company wants to start up a plan that has only 401(k) contributions and safe harbor match contributions. If this is the only money in the plan and it is top heavy, does the employer have to contribute 3% to everyone not receiving the safe harbor match (ie, they are not deferring)?

If the answer to above is "no", would that answer change if the owner rolls money into this new plan from another employer's plan or IRA, in which case there would now be money in the plan other than 401k and s/h match?

thanks

[Leopurrd]

taking each plan year into consideration, if the ONLY contributions are 401k and safe harbor you are exempt from the top heavy rules. The plan may in fact be top heavy, but no additional $ are required. Rollovers would not apply, but forfeitures do. I recommend that when you draft the doc, have the forfeitures REDUCE and not reallocate. If you reallocate forfeitures according to the document one plan year, in addition to the safe harbor/401k contrib, you would not be exempt from the top heavy rules and the 3% minimum contribution would apply.

HTH,

Vicki

[austin3515]

But of course if the only money is SH match, rollover and 401(k), there shouldn't be any forfeitures!!

[Leopurrd]

Thanks, Austin! Sometimes its the easy things that pass me by.....