Offsetting discretionary contributions by safe harbor non-elective con

[AndyH]

Any problems with offsetting a discretionary contribution (salary ratio, age weighed, tiered, whatever) by a 3% nonelective, such that all participants get at least 3%, but younger employees might get only 3%.

This would be in lieu of an A + B approach.

Obviously this would be subject to the general test, and the money types would be separately tracked for vesting, payment options, etc. I wonder about benefits, rights, and features, for example as a potential problem, in the case where the discretionary portion is available in-service. Thoughts?

[Guest mo]

I think Section VIII(B) of Notice 98-52 expressly permits the kind of allocation you are proposing.

[AndyH]

Thanks for the feedback, Mo. We read it the same way, but it's helpful to hear other interpretations.