Provide "lesser" SH match for HCE's (instead of none?)

[austin3515]

I can exclude HCE's from SHMAC. Can I provide them with a lesser match instead of no match at all and still maintain the ACP Safe Harbor? I'm trying to maintain the current match for the HCE's and give the NHCE's the SHMAC.

[Lou S.]

Sounds like it should be easy to do. Unfortuately I'm not seeing anything in the regs that easily allows 0% < HCE match rate < SHMAC rate. If someone does no of a provsion that would fit into it, I'd be interesed to see it too as that would make a select few employers somewhat happy.

[austin3515]

According to Sungard Corbel, the answer is "no" this is not possible.

[rcline46]

_{Set up plan excluding HCEs from SH match. Allow discretionary match. Then do discretionary match to HCEs, not more that 4%. This should pass testing. Make sure discretionary is offset by any SH match (which is more valuable). Why won't this work?}

[Tom Poje]

*hack * hack * dusting off the old paperwork

at the 2002 ASPPA Conference, Q 14 (of course, any comments do not necessarily reflect the actual position of the IRS)

Plan excludes commissions from definition of compensation. Also can it limit the safe harbor match to a specific dollar amount only for

HCE?

Yes.

............................

Based on the regs, you would think it is possible, because they only require that all NHCEs receive a certain amount.

I hadn't thought about it, but I'd say the same applies to the nonelective. It's okay as long as all NHCEs receive at least 3% SHNEC. So could I give the HCEs a 1% SHNEC?

or put another way, lets say I give everyone a 1% SHNEC and then bump the NHCEs up to 3%. why wouldn't that pass the safe harbor rules.

so I would lean toward thinking you are limited by the terms of the document. I've never seen a volume submitter provide such options, but is that because it is not permitted or simply because no one thought of providing that option (e.g. why would an HCE write a document so he gets less than the NHCEs)

[austin3515]

SunGard's response on the match was that it was a no-go because the features of the SHMAC and discretionary match were different, i.e., distribution restrictions, etc.

It's funny because it did occur to me that I could try submitting for a DL, because obviously if I can give them zero I can them less.

Thanks everyone,