Safe Harbor Eligibility

[Guest dstran]

Can a safe harbor nonelective contribution eligibility coincide with pretax eligibility or does it have to coincide with profit sharing eligibility?

Example:

Pretax eligibility: 6 months

Discretionary profit sharing eligibility: 1 year

Safe harbor nonelective: can this be 6 months or does it have to coincide with profit sharing?

I am aware that safe harbor matching must coincide with pretax eligibility.

Thank you

[Tom Poje]

as long as the eligibility is not longer than 1 year/ age 21, it can be whatever you want.

by the way, the same would hold true for the safe harbor match.

The regs are real clear that you do not have to provide safe harbor contributions to 'otherwise excludables'

what you can not do is have a 2 year wait as is possible for profit sharing contributions.

[Guest dstran]

so you can technically have 3 different eligibilities as follows:

pretax- 0 service

safe harbor nonelective - 6 months

profit sharing- 1 year

please advise

[Tom Poje]

plans are hard enough to run without you throwing in different what ifs...

all Notice 2000-3 says is that you don't have to provide the SHNEC or SHMAC to those who have less than 1 yr svc or age 21.

so, logic would be as follows:

plan is testing otherwise excludable separately

that sounds easy enough.

the allocation for the group in the otherwise excludables is:

no ps

safe harbor for those with at least 6 months.

since the regs now refer to the SHNEC sort of as a QNEC, I think what you have is a plan with the following:

3% QNEC to all employees with 6 months of service, and a profit sharing to those with 1 year or more.

my understanding of how it works:

you have a 3% QNEC with no hours/last day requirement, therefore it satisfies safe harbor conditions and therefore you get the free ride if you want. well, assuming proper notice was given as well. you could not get the free ride on the otherwise excludable group since not all received the 'QNEC'

but then again I could be wrong on all that, but why you would even set up a plan like that is beyond me.

I am really guessing on how things would work under those eligibility conditions.