Can Employer Establish a Single Account for Elective Deferrals and 3% Safe Harbour Contributions

[Guest EMM118]

A small client has two common law employees. The client recently established a cross-tested retirement plan program. Under the defined contribution component element of the cross-tested program, these common-law employees receive/are eligible to make (1) elective deferrals, (2) 3% safe-harbour non-elective contributions and (3) profit sharing contributions.

As the contributions under (1) and (2) above are 100% vested, the client asked if these amounts could be held in a single account. As the profit sharing contributions are subject to a top-heavy vesting schedule, they would be held in a separate account.

Is there anything that would prohibit the client for establising a single account for each employee with respect to elective deferrals and the 3% safe harbour contributions?

Thanks in advance for your thoughts.

Ed

[WDIK]

Actually, there could be a single investment account for all three types of contributions. However, the different types of contributions, earnings allocations and the appropriate vesting would need to be accounted for separately on paper.

[Tom Poje]

as WDIK pointed out,you could have a single investment as long as you track things somewhere, and can provide that info to the participants

a reminder that another difference is that it is possible to take a hardship on deferral but not on safe harbor - so its not simply a matter that 'both are 100% vested'