safe harbor and top heavy pass

[Guest nipa]

I have a plan which ihas basic match safe harbor formula. This year profit sharing forfeitures are to be reallocated. I understand this takes the plan out of the top heavy pass. The reallocation of forfeitures is on a comp to comp basis or 1.07% of pay to both HCE and NHCE employees. Does an additional amount need to be deposited for those participants who do not receive a safe harbor match to reach the 3% top heavy minimum or does the 1.07% suffice? Thanks

[BG5150]

Everyone eligible at the end of the year must get a total Employer allocation of 3% of 415 comp. Or an allocation equal to the lowest allocation of a key employee (if less than 3%).

[cpc0506]

Everyone eligible at the end of the year must get a total Employer allocation of 3% of 415 comp. Or an allocation equal to the lowest allocation of a key employee (if less than 3%).

It is my understanding that the key employee's contribution rate is determined based upon all contributions. And his salary deferral is 'considered 'an ER contribution. Is that right?

Thanks

[Sully]

It is my understanding that the key employee's contribution rate is determined based upon all contributions. And his salary deferral is 'considered 'an ER contribution. Is that right?

Thanks

Correct. See 1.416-1 Q&A M-20.

Also note "...elective contributions on behalf of employees other than key employees may not be treated as employer contributions for purposes of the minimum contribution or benefit requirement of section 416."

[D Lewis]

Does the Plan document allow for forfeitures to be used to pay fees?

If so, that may be an option.

Otherwise, have the Safe Harbor contributions been made yet?

Does the Plan document allow for forfeitures to be allocated to any source?

If the Safe Harbor has not been completed yet, and the document allows it, use the forfeitures to reduce the Safe Harbor contribution.