401(k) and ESOP

[AJ North]

One of my 401(k) Safe Harbor plan sponsors has elected to send the SH contributions to a ESOP they also have. Both have the same plan year. And both plans have existed for several years. And this will be effect for the first day of the 2014 plan year.

Which plan should have the SH employer contribution formula provision? Or should both have it? Both Notice 89-52 and 1.401(k)-3(e) are not 100% clear. We did one plan with the ESOP only have the formula, but now I am not so sure and having second thoughts.

Thank you.

[Belgarath]

Try 1.401(k)-3(h)(4). I think this will clear up your questions.

[AJ North]

Thank you for the cite. I did previously understand that the plan actually receiving the contribution must provide for the formula and the plan "sending" the contribution must have a provision indicating that contribution would be made to another plan. I am not sure it answers whether the sending plan needs to have the SH formula as well. Sorry to be so literal here.