414(s) compensation for SH, Top Heavy

[justanotheradmin]

Quick question,

I have a plan with 3 people, two owners, one non-owner employee. All are HCE. The non-owner EE (we'll call them EE1) receives a large bonus, the owners do not. The plan wants to exclude bonus. Since all are HCE, it would pass 414(s). The plan does a 3% safe harbor to satisfy top heavy. They used to have NHCE, but don't any more, but kept the 3% SH.

As far as I know, since the compensation would pass 414(s), the 3% SH contribution on just the non-bonus compensation would be fine. Anyone disagree?

My concern is the top heavy. Does anyone know, or know where I can find, some guidance on this? Would the change of the plan definition of compensation, no longer allow the SH 3% to do double duty and satisfy the Top Heavy minimum?

What I read in 416©(2) requires 415 comp. But 416(H)(i) provides the Safe harbor contribution exception. which defines comp 401(k)(9) as 414(s).

Slightly different option(I think is simpler):

The owners really seem to like receiving their own 3%. But lets assume they didn't mind not receiving it. Is there any problem with using the ability to exclude the HCE from receiving the 3%SH?

Exclude HCE from SH

SH would satisfy ADP, owners could defer max.

Plan would still satisfy TH with SH contribution, though none would actually be given unless a NCHE was hired.

Thoughts? Something I'm missing?