2 Plans of same Employer - one SH and one Not

[cpc0506]

Client has come to us and would like to start a new plan for their employees covered under the Service Contract Act.

Currently the client sponsors a QACA match plan, no other employer contributions. There were 65 eligible employees in 2014.

Client wants to start a new plan effective 1/1/2016 for the 8-10 employees covered under the Service Contract Act, but do not want to provide the QACA match to these employees.

Can a company sponsor a safe harbor plan for one portion of its employees and a non-safe harbor plan for another portion of its employees?

If it is permitted, what would be the pros/cons to doing this?

[Bill Presson]

Yes. The QACA plan has to be amended to exclude the SCA employees. The SCA plan would exclude everyone except the SCA employees.

[cpc0506]

So the client will have 2 plans. Is it correction that the plans will have to pass coverage separately since I cannot permissively aggregate two unlike plans?

[rcline46]

Why the concern? the PW contributions are NOT deferrals and are of no consequence. Why not let them into the QACA plan?

[cpc0506]

They want to allow them to make deferral contributions but NOT received a QACA match, so a separate plan will need to be established.