Tiered SHNEC Contributions

[Rich L. Mayer]

Is it possible to have a tiered Safe Harbor Non-Elective Contribution based upon years of service. Client is proposing a 3% SHNEC for all employees, which would increase to 5% after 5 years of service. If the additional 2% was a Discretionary contribution after 5 years of service (a possible group allocation) what additional tested would be needed?

[401king]

First option is not possible. The second option is (and may be preferred because it's vested), you just need to run top-heavy test. You'll probably already be meeting TH requirements with the 3% safe harbor contribution.

[Tom Poje]

lets suppose the only people with 5 or more years were HCEs. you have a possible discrimination issue, so need to test that.