Can a Key/HCE receive a reduced Safe Harbor Match?

[Guest PensionPrincess]

I understand that Key/HCEs can be discriminated against, and don't have to receive any Safe Harbor match if the document so states. Based on the formula, one of the partners should receive approximately $8k in safe harbor match, but only wants to put in $5k for himself. Can he do this?

[Jim Chad]

The only right way for him to get a smaller match is to defer a smaller amount. It is always wrong to do something different than a specific provision in the Plan document.

I'm usually scared to death to use the words always or never....but this one I'm pretty sure about.

[Guest PensionPrincess]

Thanks for your comments Jim! It really rubbed me the wrong way too - we're telling him it's the formula amount or nothing (exclude HCEs altogether). Thanks again!

[rcline46]

You can always write a lower formula for the HCEs, as long as it is done before the year is over.

[K2retire]

Don't you mean it has to be amended before the safe harbor notice is distributed (30 days before the plan year begins)?

[rcline46]

No SH match for HCEs, discr match not to exceed SH match or 4% whichever is less, no testing, works for me.