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Posted

I'd swear I've seen, and perhaps been involved in a discussion similar to this, but darned if I can find it, so...

Plan is currently a 3% nonelective "maybe" plan. So, at this point, they are NOT a safe harbor plan for 2017. Suppose many of the employees will now be entering a union. There's no problem with amending  the plan to exclude union employees. What I want to conform is this: since they will, for 2017, have both union and non-union wages, then for 410(b) purposes (1.410(b)-6(d)(2)(i)) they have "dual" status - so when it comes to testing profit sharing allocations,  they will be non-excluded for purposes of their non-union hours and wages, as well as top heavy. Once the plan amends into Safe Harbor status for the year, must they receive SH 3% on the non-union wages? My inclination is yes, but I'd appreciate any other opinions. Thanks.

(edited to remove a section that I intended to delete, but forgot to in original post)

Posted

I'm not up on all the SH intricacies, but if you are a "maybe SH" then you're saying that none of the mid-year amendment prohibitions apply unless and until you actually do your SH amendment? Because if the union exclusion is not already in the plan then an amendment to add it would be an amendment that would reduce/limit SH coverage and otherwise be precluded if those restrictions did still apply.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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