safe harbor excluded groups

[WCC]

Hello,

Company sponsors a safe harbor 401k plan. Plan document excludes "executives" from receiving the safe harbor match. In this case "executives" will always be HCE's by comp except for the first year of employment.

Question: company hires a new employee (immediate eligibility just to make this simply). Employee is hired as an executive and falls into this excluded group. However, this employee is not a HCE the first year of employment. I am thinking this employee will be required to receive the safe harbor match even though she is part of the executive group. Otherwise wouldn't we have a higher rate of match for HCE's, who are not excluded because they are not executives, than we would for this one executive who is currently not an HCE?

Thanks

[401king]

I wasn't aware you could exclude employees by class, other than excluding HCE & Key employees. But, what would you do with an "executive" hired late in the year and his initial year comp is less than the HCE limit (making him an NHCE for the following year)?

[Tom Poje]

assuming you mean the executive group can defer, as opposes to the executive group being excluded from eligibility entirely, which would be ok as long as coverage is passes.

that sounds like a poorly filled in document. (e.g. I have an old xxxx document checklist and for safe harbor you could exclude:

1. union

2. key who are HCE

3. HCE

4. other _____________

but the law also requires any NHCE who is eligbile to defer to receive a safe harbor.

Thus the blank could have said Executives who are HCE (thus somewhat like option 2).

rather than Executives, which it sounds like was done.

can you get by with a corrective amendment? Not sure, because you have a bad document in the first place, at least in my opinion.

[WCC]

assuming you mean the executive group can defer, as opposes to the executive group being excluded from eligibility entirely, which would be ok as long as coverage is passes.

that sounds like a poorly filled in document. (e.g. I have an old xxxx document checklist and for safe harbor you could exclude:

1. union

2. key who are HCE

3. HCE

4. other _____________

but the law also requires any NHCE who is eligbile to defer to receive a safe harbor.

Thus the blank could have said Executives who are HCE (thus somewhat like option 2).

rather than Executives, which it sounds like was done.

can you get by with a corrective amendment? Not sure, because you have a bad document in the first place, at least in my opinion.

I just wanted to throw out the question. This was just a hypothetical and we are looking at the possibility of excluding executives only from the sh match (they would still be eligible to defer). As I was going through this i thought what if the scenario in the original post occured (which everyone agrees would cause problems). Thanks for the clarrification that it cannot just say executives and we must include HCE who is also .....

Thanks