Safe Harbor mid-year

[Guest Achilles]

I have a plan that based on the 12/31/2008 determination date, is top heavy for 2009.

This is a straight profit sharing only plan, no 401(k) provision built into their document.

However, we are looking at adding a 401(k) and basic safe harbor match provisions as of 6/1/2009.

How does this 2009 year work if they are deemed to be top heavy, yet also added a bsaic safe harbor match?

At the end of 2009, would we just have to look at what each person received as far as a safe harbor goes, and make-up any differences to get to the 3% top heavy?

Would the 3% only be due on compensation from 1/1/2009 - 5/31/2009?

Thanks in advance.

[Tom Poje]

according to Revenue Ruling 2004-13, if there are no other contributions besides deferrals and safe harbor, the plan is not top heavy for that year, so it shouldn't matter if the safe harbor starts mid year. there was never any exception written for new safe harbor plans that start mid year.