Change to Safe Harbor

[Dougsbpc]

Have a profit sharing plan with a two year eligibility period and 100% vested immediately. The plan is cross-tested and a 5% gateway is provided to all non owner employees.

Suppose they want to change the plan to a safe harbor 401k with a 3% SH employer contribution.

They want to keep the two year eligibility for profit sharing.

They must provide the 3% SH to all employees with one year of service. Must those employees also be provided a 5% minimum gateway as those with two years of service do?

Thanks

[Tom Poje]

the 5% gateway must be provided to all participants who have received a nonelective contribution.

the maximum eligible wait for deferrals is one year, therefore

the maximum wait for a safe harbor is one year

since the safe harbor is a non elective, then these folks must also receive the gateway

while you can split your testing group into 2 parts - otherwise excludables and statutory includables, no such possibity exists of splitting into groups based on those with 2 years or less and those 2 years or more.