Davis-Bacon/Prevailing Wage Offset of Safe Harbor

[Guest CSTS]

We have a Davis-Bacon/Prevailing Wage 401(k) Safe Harbor Plan. The DB/PW contribution for the year offsets the employer's liability for the Safe Harbor. This Plan also allows participants to take hardships from the DB/PW (QNEC) source. I wasn't involved in the design and couldn't persuade them otherwise. The prior TPA appeared to be recharacterizing the DB/PW amount that was equal to the 3% Safe Harbor for participants that qualified. While I've never encountered it in practice, I speculate that this was done because of the different distribution restrictions that are imposed on the Safe Harbor (not available for Hardship).

So, by using an offset, does the DB/PW amount that offsets the Safe Harbor need to be subject to the same distribution rules as the Safe Harbor or is the full DB/PW amount available for hardship, even though some of it is satisfying the sponsors Safe Harbor Contribution obligation.

[Guest CSTS]

Here's a wrinkle. The DB/PW has not been considered a QNEC, as I had assumed. As QNEC's are not available for hardship, the DB/PW must simply be employer contributions to be available for hardship. Same questions still applies thought, does that mean that a portion of the DB/PW contribution source is not available for hardship because it is offsetting a Safe Harbor commitment?