Safe Harbor Match for HCE's

[Guest MrT]

Can the employer adopt the SH Match for the Non HCE's and at year end decide if they can afford to make the same or a lesser amount to the HCE's? I can't find anything that says you can't do this? Please let me know if you have anything on point?

[Tom Poje]

the SNHEC can be a 'maybe', so it should be possible to ive a notice at the beginning of the year that HCE might get and NHCEs will get, but there is no such option for the SHMAC.

it is in the document at the beginning of the year. now you could stop it at some point during the year for the HCEs (following the rules as defined in the regs) but I see no way of accomplishing what you want. you are trying to turn it into a discretionary match, which would only be possible if you have provided a SHNEC to all.

[Guest MrT]

the SNHEC can be a 'maybe', so it should be possible to ive a notice at the beginning of the year that HCE might get and NHCEs will get, but there is no such option for the SHMAC.

it is in the document at the beginning of the year. now you could stop it at some point during the year for the HCEs (following the rules as defined in the regs) but I see no way of accomplishing what you want. you are trying to turn it into a discretionary match, which would only be possible if you have provided a SHNEC to all.

So you feel that even though the HCE's would get the same or less in an employer match and it would not be 100% vested they cannot do it. The SH Notice would say that the SH Match would be made to the NHCE's. I do not see anything on point about this and it seems that you could do pretty much the same things with the SHNEC by giving the HCE's the 3% contribution even though you did not commit to it or do a notice for it.

[Kevin C]

1.401(k)-3(e)(1) is on point. I agree with Tom, there is no way to do what you want in a safe harbor match plan.

(e) Plan year requirement

(1) General rule. --Except as provided in this paragraph (e) or in paragraph (f) of this section, a plan will fail to satisfy the requirements of section 401(k)(12) and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in paragraph (g) of this section, a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of § 1.401(k)-1(b) if it is amended to change such provisions for that plan year. Moreover, if, as described under paragraph (h)(4) of this section, safe harbor matching or nonelective contributions will be made to another plan for a plan year, provisions under that other plan specifying that the safe harbor contributions will be made and providing that the contributions will be QNECs or QMACs must also be adopted before the first day of that plan year.

[Guest MrT]

1.401(k)-3(e)(1) is on point. I agree with Tom, there is no way to do what you want in a safe harbor match plan.

(e) Plan year requirement

(1) General rule. --Except as provided in this paragraph (e) or in paragraph (f) of this section, a plan will fail to satisfy the requirements of section 401(k)(12) and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in paragraph (g) of this section, a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of § 1.401(k)-1(b) if it is amended to change such provisions for that plan year. Moreover, if, as described under paragraph (h)(4) of this section, safe harbor matching or nonelective contributions will be made to another plan for a plan year, provisions under that other plan specifying that the safe harbor contributions will be made and providing that the contributions will be QNECs or QMACs must also be adopted before the first day of that plan year.

Thank you very much.........ok so now I have to give the HCE's the same match, do it also have to be 100% vested?

[Bill Presson]

Thank you very much.........ok so now I have to give the HCE's the same match, do it also have to be 100% vested?

Yes.

[Tom Poje]

I guess this bears repeating, because it keeps coming up from time to time.

It is the document that tells you how to perform any allocation, and by law you have to follow the terms of the document.

The notice is, well, just a notice. It was the govt attempt to make sure NHCEs were informed each year that a plan existed (otherwise the HCEs could sock away bucks and have no testing and if the NHCEs 'didn't defer', oh well.)

so you can't not 100% vest a SHMAC whether it is an HCE or NHCE. now you can write the document so only NHCE receive the SHMAC, but that would be for next year.