safe harbor profit sharing

[k man]

can you give a 3% safe harbor profit sharing to NHCE's and a 3% regular non elective to HCE's and still pass coveraqe. you do this under a cross tested plan document with each employee as his own rate group.

[Mike Preston]

Off the top of my head I can't think of any reason why not.

[Kimberly S]

I've been doing something similar for years. Our documents usually have separate allocation groups for HCEs and NHCEs. We typically did the 3% SHNE for NHCEs and a regular non elective of more than 3% for the HCEs.

[austin3515]

Coverage doesn't care if they get a SHNEC or a PS contriubtion. They're treated as benefitting either way. Then you turn to nondiscrimination, and you need to run rate group testing because (probably) there are different allocation conditions on profit sharing then safe harbor.

But, lucky for you, all of the nonexcludable NHCE's are receving the same 3% of pay that your HCE's are getting, so rate group testing is passed by default (i.e., because everyone is benefitting in every rate group). So with this plan design, you can never have any nondiscrimination/coverage issues EXCEPT: if the plan is top-heavy, you've blown the exemption by allocating profit sharing contributions. If only part-year pay is used to calculate the SHNEC, you'll need to give them an additionl top-heavy minimum.