New safe harbor 401k compensation definition

[Guest ladycpa2]

We have a new 401k safe harbor plan with an effective date of 1/1/07. The 401k safe harbor was effective 10/1/07 and they only made deferrals and deposited a match based on 10/1/07-12/31/07 compensation. They also make a discretionary profit sharing contribution. The definition of compensation is W-2 comp plus deferrals less bonuses, and only for the portion of the year that they are a participant. I am trying to figure out if they can allocate the discretionary profit sharing contribution on full year compensation since the effective date of the plan is 1/1/07? If they are newly eligible I understand that they would only include compensation for the portion of the year they are a participant, but what if it's a new plan?

Thanks!

[Lou S.]

Check your document as to when participants enter the plan, but it sounds like full year comp is correct for the PS. We do this quite often for new plans.