Safe Harbor and permitted disparity

[Chippy]

I'm working on a plan, 3% safe harbor is allocated on full year compensation. The plan is top heavy. So the safe harbor covers the top heavy minimum. They also would like to make an additional 3% profit sharing contribution. The p/s contribution is allocated on an integrated basis. Would the 3% p/s contribuiton be allocated as if the plan is top heavy, straight 3% to everyone eligible, or would it be allocated as if the plan is not top heavy on compensation plus excess compensation. THanks for any help to clear this up.

[Laura Harrington]

I'm working on a plan, 3% safe harbor is allocated on full year compensation. The plan is top heavy. So the safe harbor covers the top heavy minimum. They also would like to make an additional 3% profit sharing contribution. The p/s contribution is allocated on an integrated basis. Would the 3% p/s contribuiton be allocated as if the plan is top heavy, straight 3% to everyone eligible, or would it be allocated as if the plan is not top heavy on compensation plus excess compensation. THanks for any help to clear this up.

You need to look to the plan document for the answer. You have to follow the allocation formula stated in the document.

[Below Ground]

You may not count the 3% Safe Harbor Nonelective Contribution toward the "base allocation" of an integrated formula. It is a separate an distinct contribution allocation.

[BG5150]

Is the Safe Harbor for first-year participants based on full-year compensation? And were any forms of compensation excluded from the TH determination? I believe the Top Heavy contribution is based on full-year, 415 compensation, which cannot exclude OT, bonus, commissions, etc.

[Chippy]

For the Safe Harbor, the participants enter the plan on the first day of the quarter after they are hired. There is a one year wait for eligibility for the profit sharing. Comp is based on date of participation, however due to the different eligibility, all participants receiving safe harbor received 3% of their full year 415 comp.

So, in a top heavy plan, everyone received 3% of their 415 comp in the safe harbor contribution. For the profit sharing contribution, the company wants to contribute another 3%. Since the plan is top heavy would the additional profit sharing contribution be allocated based on comp or comp plus excess? For someone earning the mas, would the basis be 245,000 or comp plus excess of 383,200? This is a non-standardized Relius adoption agreement.

[BG5150]

Where do you get $383,200?

Read the plan document for the allocation method for the profit sharing allocation. The Top Heavy contribution seems to be satisfied already, so you would be just allocating a regular 'ol profit sharing.

[Chippy]

The 383,200 is 245,000 plus 138,200,( the comp over the social security wage base.)

It's been a long year so far and it's only January 11! thanks for you help

[Below Ground]

I failed to fully read the OP. Sorry. BG5150 is correct. The SHN satisfies the THM, so then allocated the PS as if the Plan was not TH.

[K2retire]

You trying too hard. If you (temporarily) ignore the safe harbor, you would allocate your Integrated profit sharing contribution, and then check to be sure that the top heavy minimum was satisfied wouldn't you? The only difference here is that there is one more allocation from which the top heavy minimum could be satisfied.