Plan Design Question

[Spencer]

I am reviewing prior plan documents for a new client. Officers are excluded from the Safe Harbor Non-elective contributions. I can't figure out why. The client doesn't know why - just said it was originally setup this way. The plan is Top Heavy, but the SHNEC satisifies the TH min. Any thoughts?

Thanks!

[Lou S.]

Just a guess but it was probably to save money on contributions when it was originally setup.

[K2retire]

Does the plan also have a cross tested profit sharing contribution? We often excluded HCEs from SHNE contributions to give more flexibility in calculating the profit sharing contributions.

[Spencer]

Does the plan also have a cross tested profit sharing contribution? We often excluded HCEs from SHNE contributions to give more flexibility in calculating the profit sharing contributions.

No, not cross tested. Actually, the plan doesn't even allow for a discretionary contribution. This document has an option to exclude HCEs from the SHNEC, but they didn't check that. They didn't exclude HCEs or Key EEs - it specifies "officers". It's just odd.

[Tom Poje]

the plan practically cant have other contrinutions. suppose you have an officer who is not a key employee.

they would be eligble for top heavy contributions if something other than safe harbor contributions were made.

so Id assume the design is to save money.

on the other hand, if the officer is not an HCE then you you have problems.

[Spencer]

the plan practically cant have other contrinutions. suppose you have an officer who is not a key employee.

they would be eligble for top heavy contributions if something other than safe harbor contributions were made.

so Id assume the design is to save money.

on the other hand, if the officer is not an HCE then you you have problems.

You are correct, Tom. There is no discretionary PS and no additional match. Just deferrals and the SHNEC.

[BG5150]

What happens if someone becomes an officer mid-year? Or ceases to be one mid-year?