Participants did not receive Safe Harbor

[Guest JohnSB]

A 401(k) with Safe Harbor had 2 participants become eligible in November 2006. The plan contributes the safe harbor at the same time as deferrals. The two participants chose not to defer and were overlooked for the safe harbor contribution. How should we fix this?

Also, what compensation would be used to base the safe harbor contribution on? Would they receive 3% for all comp in 2006 or only the comp after eligibility?

[Kimberly S]

The plan document will tell you what compensation to use to calculate the contribution.

[BG5150]

My suggestion: Make them whole as soon as possible and allocate applicable earnings.

(And the comp should be spelled out in the docs.)

[Guest SuzieQNEC]

In reference to making them whole as soon as possible.....

A plan with a 6/30 year end missed the safe harbor contribution for 6/30/06 by about $5,000 (we are assigning their employer contribution for the profit sharing portion to the safe harbor, but it is still short). Can it be deposited now, in 11/07, along with lost earnings? If so, what is the penalty?

Thanks