Top Heavy Plans that are Safe Harbor Plan

[Guest Michele Ciz]

If I have a plan that is top heavy, and the only money going into the Plan is the safe harbor match, then they get an exemption from the top heavy minimum contribution, correct? If the safe harbor is the 3% qnec, you get the exemption. Can you use date of participation compensation for the 3% qnec?

[Tom Poje]

well, at one ASPPA conference they indicated the answer was yes, you could use date of participation comp.

having conversed with 'some' IRS officials, there is some disagreement about the bodies about this issue, but for now I think you are safe with that approach. basically, if there are no other contributions, the plan isn't top heavy, so it doesn't matter what comp is used. (But you can't provide the safe harbor to statutory includables only and ignore the otherwise excludables. they made clear anyone eligible must receive the safe harbor)