3% Safe Harbor with 7% Profit Sharing Contributuion

[Alex Daisy]

A client wants to offer a 401(k) Safe Harbor (3% Non Elective) with a 7% Profit Sharing Contribution.

Is any non discrimination testing required on the 7% Profit Sharing Contribution?

I would not think so because the company is giving it to everyone in the Plan (HCE's and NHCE's).

Any input will be appreciated.

ALEX

[Guest Sieve]

If all employees will be particiants in the PS portion (after the appropriate age/service waiting period), and the PS allocation formula meets a safe harbor (e.g., pro rata or permitted disparity), then there will be no need for minimum coverage (410(b)) or non-discrimination (401(a)(4)) testing of the plan's PS piece.

There are, however, other types of "non-discrimination" testing that will be required: top heavy (416) & annual addition limitations (415) & compensation definition (414(s)).