safe harbor 4k plans

[Guest DNH]

Can the safe harbor match be used towards satisfying the top heavy requirements? If so, is it then subject to a ACP test? Greatly appreciated, DN

[Guest Sieve]

Is your question whether a plan's SH match can be used by that plan to meet the plan's TH requirements? If so, then the answer is that a plan that includes only contributions that meet SH ADP & ACP is exempt from top heavy testing. (IRC Section 416(g)(5)(H).)

Or, are you posing a different question?

[K2retire]

If this is a top heavy SH plan that is also making a profit sharing contribution, they will still be subject to top heavy minimums. All employer contributions can count toward that minimum.

[BG5150]

Does the document allow that the match counts towards TH? (Didn't EGTRRA or PPA allow that the match can count, but doesn't have to?)

[Kevin C]

It was an EGTRRA change. As you say, it was allowed, but not required. It was part of the model EGTRRA good faith amendment language.

[BG5150]

So, it's allowed, the OP just has to check the plan's document to see if it applies.

[Guest DNH]

It is a safe harbor plan that is top heavy but has consistently been making profit sharing contributions so it has never been an issue. For the 2008 year money is in issue. It seemed to me that even safe harbor matching can be applied to meet the minimum requirements but then I thought I saw something that the ACP test would be required if the safe harbor matching was applied. Thanks so much for everyone responding. Please respond again! DN

[Guest North Meets South]

If the only contributions are EE deferrals and a Safe Harbor contribution, Top-Heavy is not an issue for that year. You would not code the plan as being Top Heavy during that year.

[Guest Sieve]

DNH --

I agree with NMS (as also indicated in Post #2). Since, for 2008, no PS contribution was made and the only contributions were SH contributions, then TH was not an issue.

However, if the employer has been making PSP contributions in the past, then meeting TH requirements has been required in those years. And, if there were any conditions on the PS allocations (such as 1,000 h/s), then there may have been TH allocation problems in the past (i.e., all those employed at year-end may not have received the TH contribution, as is required).