Safe harbor 3% and Comp while a participant

[rfahey]

I have a top heavy 3% safe harbor plan for a medical group. I am getting 2 different answers on using comp while a participant ( for people who enter the plan on 7/1 )

I thought that if there are no other profit sharing contributions or forfeitures allocated that the 3% then only has to be paid on CWP.

Any clarification would help ! Thanks !

[Jim Chad]

You are correct. If a Plan's only employer contribution that year is the 3% SHNEC (including no forfeitures), the Plan is deemed not top heavy. So you would not be required to use whole years comp for TH purposes and Safe Harbor Plans are allowed to exclude comp prior to Participation.

[Archimage]

I do agree with Jim but if I remember correctly, some IRS reps at various conferences have stated opposing opinions.

[Belgarath]

Also, this is optional and not mandatory. So the plan involved MIGHT use full year comp, even though this isn't required under 1.401(k)-3(b). Some do.