3% Safe Harbors to HCEs too?

[Guest Effie Clark]

I can't find anything that says an HCE can or can't share in the 3% non-elective safe harbor contribution. Anybody already know this?

Also, I have a client with two plans - a 401(k) and an MP plan. He allows immediate entry for deferral contributions but employees have to wait 1 year to get match and money purchase contributions (MP plan is satisfying the 3% non-elective safe harbor contribution). In order to be considered a safe harbor, do all employees need to get this 3% even if they haven't satisfied eligibility requirements to share in the MP contribution?

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EAC

[MWeddell]

While one is not required to give the 3% nonmatching safe harbor contribution to HCEs, it is permitted.

You may disaggregate the 401(k) plan into two component plans, with the safe harbor contribution given in the MPP to all employees who could not have been excluded under the maximum age and service conditions permitted by Code Seciton 410(a). If there are any HCEs in the component plan of < 21 and < 1 employees (which is rare), it must be separately tested. Notice 98-52, Section VIII(H).