multiple 401k plans same employer

[Gary]

an employer has 2 401k plans.

one plan is deferrals only

the other plan includes the key employees, is TH and provides 3% non elective safe harbor

both plans pass discrimination on their own.

so no TH in deferral only plan.

they are thinking of adding a DB plan and testing it with 401k safe harbor plan.

they need to include a couple of people from deferral only 401k plan in DB plan to pass minimum participation.

So questions is:

any problem with a participant in the 401k deferral only plan also participating in safe harbor 401k plan?

the person would be subject to the deferral limit of 17k in total of course and perhaps make deferrals in one plan and receive employer allocations only in other plan.

so, such a person would be in both 401k plans and the db plan, but the safe harbor 401k plan and DB plans combined do not need 401k deferral plan to pass non discrimination.

thanks

[ETA Consulting LLC]

So questions is:

any problem with a participant in the 401k deferral only plan also participating in safe harbor 401k plan?

He's not particpating in the safe harbor 401(k), but the DB plan. This is no problem on the surface if you're only testing the DB and Safe Harbor 401(k) using 'permissive aggregation'.

the person would be subject to the deferral limit of 17k in total of course and perhaps make deferrals in one plan and receive employer allocations only in other plan.

He's only in one plan. If he were in both plans, it wouldn't be a problem provided he is not an HCE.

so, such a person would be in both 401k plans and the db plan, but the safe harbor 401k plan and DB plans combined do not need 401k deferral plan to pass non discrimination.

thanks

Providing he is not an HCE, you can pass permissive aggegation with the DB and Safe Harbor 401(k) plan by excluding his amounts in the other plan. I still don't see how it would be part of both 401(k) plans.

Good Luck!

[Guest ghal]

Gary,

I don't have answer, but I do have a follow up question regarding the 401k and safe harbor (excluding the db issue). I understand both plans will pass coverage no problem. However, how do you run the ADP test in that scenario? Are you aggregating both the 401k and the safe harbor participant's deferral rates?

Thanks