Safe Harbor 401(k)

[R. Butler]

Calendar year safe harbor 401(k) plan has a profit sharing provision. No hours or last day requirement. Plan sponsor wants to exlcude a handful of HCE's from a profit sharing alloction. I don't see that they can do that in the current plan for 2011. Is there anything that prevents them from adopting a separate profit plan for 2011 with the proviisons that thye want and then merging the two plans at together a later date?

I don't see anythat anything prevents this, but want to cover all bases since essentially the new plan plan is only being adopted because the current one can't safely be amended.

Thanks for any guidance.

[ETA Consulting LLC]

Nothing precludes them from adopting a separate plan for circumventing 411(d)(6) except price for the new plan. It's entirely a cost-benefit analysis.

Good Luck.

[cpc0506]

Calendar year safe harbor 401(k) plan has a profit sharing provision. No hours or last day requirement. Plan sponsor wants to exlcude a handful of HCE's from a profit sharing alloction. I don't see that they can do that in the current plan for 2011. Is there anything that prevents them from adopting a separate profit plan for 2011 with the proviisons that thye want and then merging the two plans at together a later date?

I don't see anythat anything prevents this, but want to cover all bases since essentially the new plan plan is only being adopted because the current one can't safely be amended.

Thanks for any guidance.

How is the profit sharing allocated in the orginal plan? Is it class allocated by partcipant? If so, there is no need to add a new plan. If not, the client can adopt a new plan but they will incur the cost of a new document and an additional Form 5500 for 2011 and any later years that the plan has assets.