Safe Harbor 401(k)

[Guest rshawlaw]

Facts: Law firm with 6 attorneys (young) and 4 staff (old). New comparability doesn't work. They want the minimum commitment and maximum flexibility. Any comments on this safe harbor 401(k) design? Contribution type (1) 3% nonelective safe harbor to NHCEs only; (2) elective deferrals to lesser of $10,000 or 415 limit; (3) 3% discretionary profit sharing to HCEs only; (4) discretionary profit sharing allocated using permitted disparity (i.e., not trying to use the 3% safe harbor as a base); and (5) discretionary profit sharing allocated pro rata if any 404 room left. Company's maximum commitment is 3% to NHCEs, but HCEs can defer full $10,000 and add to that amount in increments to optimize disparity.

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RWS

[MWeddell]

Sounds fine, although I don't understand why you stated that new comparability doesn't work. One cannot impute permitted disparity for the 3% safe harbor contribution, but can still test it on an age-weighted basis. Given that the HCEs are younger than the NHCEs, it sounds beneficial to do that.

Perhaps there are other facts that you didn't list in your post that caused you to conclude that new comparability wouldn't work, but I'd consider it.

[LCARUSI]

I disagree with MWedell - new comparability works best when the "favored" group is older than the other employees. Young attornies and old staff sound like a bad combination for new comparability.

[MWeddell]

L CARUSI is absolutely right. What was I thinking yesterday?