Safe Harbor Nonelective in Integrated Plan

[Guest djsimonetti]

As I read VIII. B. of Notice 98-52, an employer profit sharing contribution of 3% of pay, which satisfies the vesting and other rules for a safe harbor nonelective contribution, can also be used to satisfy 401(a)(4). So if the plan is NOT integrated, the safe harbor does "double duty"- the employer can avoid the ADP test by committing itself to make a portion of the otherwise discretionary profit sharing contribution. However, if the plan is integrated (3% of pay up to the taxable wage base, then 3% of pay over the taxable wage base), the 3% nonelective safe harbor CANNOT be used as the base (or first) allocation of the profit sharing contribution. In effect, the safe harbor nonelective contribution is in addition to the amount allocated per the integrated formula. Is this correct?

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[MWeddell]

That's correct.

Actually, the 3% nonintegrated contribution can do triple duty if you want to count it as a top-heavy minimum contribution as well.