401k 3% safe harbor qnec

[Guest Susan M.]

Hello,

Can a class of employees be excluded (interns) from the 3% safe harbor qnec contribution

Thank you

sue

[ETA Consulting LLC]

Hello,

Can a class of employees be excluded (interns) from the 3% safe harbor qnec contribution

Thank you

sue

Sure, if they are excluded from eligibility to make deferrals.

Good Luck!

[John Feldt ERPA CPC QPA]

Or if they are HCEs.

[12AX7]

You start to get into other issues when you contemplate excluding a group of employees that otherwise would meet the eligibility requirements of the plan.

While the previous advice given is correct, it is not likely that interns are HCEs, and if this group of employees would otherwise meet eligibility and/or the statutory requirements for Age/Service, then you need to consider how the exclusion may affect the Coverage Test of the plan. This is just a starting point.

Susan, I'm not sure if you are a TPA or work for consulting firm. If you are asking this question as (or for) a Plan Sponsor, then you may want to speak with a consulting firm that is comfortable with this type of work. If you work for a TPA or consulting firm, then please do a little more research for your client before suggesting to incorporate the exclusion into the plan.

Lastly, QNECs and Safe Harbor Nonelective contributions are separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC.

Please proceed carefully.

[K2retire]

Lastly, QNECs and Safe Harbor Nonelective contributions are separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC.

Thank you for reminding people of that. I see too many cases where SHNE contributions are called QNECs and it makes me crazy!

[12AX7]

401(K), 401K, 401-K and other incorrect variations can sometimes drive me bonkers on a bad day...like today...

[BG5150]

401(K), 401K, 401-K and other incorrect variations can sometimes drive me bonkers on a bad day...like today...

What about "safe harbor"?

Safe Harbor nonelective, match, hardship reasons, profit sharing allocations, timing for deposits, DB accrual methods...

[12AX7]

I agree, BG. We have too many Safe Harbors in this industry. And, what's so safe about them anyway...

[Bird]

Lastly, QNECs and Safe Harbor Nonelective contributions are separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC.

While *I* prefer the term "Safe Harbor Nonelective Contribution", the IRS uses "qualified nonelective contribution" in the regs. FWIW.

[K2retire]

Lastly, QNECs and Safe Harbor Nonelective contributions are separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC.

While *I* prefer the term "Safe Harbor Nonelective Contribution", the IRS uses "qualified nonelective contribution" in the regs. FWIW.

There are reasons that people think they try to make things more confusing than necessary. This is just one example!

[12AX7]

Reality check - every SHNEC is a QNEC, but not every QNEC is a SHNEC. What I should have said was:

Lastly, QNECs and Safe Harbor Nonelective contributions can be separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC (other than SHNEC).