Multiple Employer Safe Harbor Plan

[buckaroo]

I have a mulitple employer plan where one employer wants to amend it a safe harbor plan and the others want to leave it as a traditional SH plan.

From a previous post: Treas. Reg. 1.401(k)-3(b) states the safe harbor contribution must be made to each "eligible NHCE". Treas. Reg. 1.401(k)-6 defines an eligible NHCE to be an employee who is eligible to make elective contributions under the 401(k) arrangement.

Can the multiple employer plan be amended for one unrelated employer and not for the others?

From the above, this cannot be done for a plan where related employers/divisions have adopted the plan and one employer wants to be SH and the other doesn't, but I did not know if the same thing held true for a multiple employer plan.

[Below Ground]

I feel I must preface my reply with a note that how much flexibilty can be employed under a multiple employer plan (MEP) is subject to a great deal of debate at this time. I am very interested in seeing replies to my post.

To me your question is related to 2 concepts. Form of document, and how are compliance standards applied under a MEP.

A MEP will typically employ a individually designed document. If changes to the document are not too extensive, you may also use Volume Submitter. Either way, you are not stuck with the boiler-plate language of the "master document", and you can make changes.

For the most part, compliance issues must be reviewed after mandatory disaggregation of employers. That is, each Adoptiong Employer (AA) must stand on it own. There is no consolidation on a plan level basis.

So, the first question is does the form of document used allow for the amendment desired. It is difficult to image a situation where this would not be true.

Next, if the Plan was not a MEP, could the desired amendment be made to a stand alone plan for the AA? These issues, like impact on coverage, must be tested on a stand alone basis of the AA. For these purposes, terms like "Eligible NHCE" will mean from the workforce of the AA, not the entire population from all AA Firms.

So, in theory, you can do what you want. That is, you can amend to be specific to an AA. In fact, you can have options between standard provisons for select by the firms. This means that each AA can have a destinctive plan design. You just need to make sure that the document form used can be amended in the manner desired. If not, get a different document.