Safe Harbor Allocation

[Guest KarenLS]

I've a plan whose contributions are allocated equally among all eligible participants. IF they go to a safe harbor for 2000, and do the 3%ER, can we keep that allocation, IF everyone is getting at least 3%? Or, must we do 3%, then the difference (supposing there will be more than a 3% contrib made) could go equally?

[Ervin Barham]

Your second statement is more like it. The 3% safe harbor must be put in for those eligible. If the plan document provides, then you may make an additional "profit sharing" contribution if allowable. You will have to keep track of these separately since it is likely that different vesting schedules and different distribution options apply. I think of the 3% safe harbor almost as an additional type of contribution.

Check with your plan document provider to see how they are going to write this up in the document.

[MWeddell]

I think what you suggested would work. If you don't want to track the 3% QNEC separately, then all contributions need to be fully vested with no last day of the plan year condition, etc.

[This message has been edited by MWeddell (edited 12-03-1999).]