Safe Harbor Contribution Question

[metsfan026]

I know that the Safe Harbor isn't mandatory for the Highly Compensated Employees, but could the client make a lesser match for those people (say 1% to all HCE and the typical 100% of the first 3% + 50% of the next 2% to the Non-Highly)?  Basically the client doesn't have the cashflow to accomodate the contribution for all of the highly, but they want to make something to them.

It's not an issue we've run into before so I wanted to be sure.  Thanks!

[Belgarath]

Yes, 100% up to 1% for HCE's only is fine as long as your document permits it.

[metsfan026]

4 minutes ago, Belgarath said:

Yes, 100% up to 1% for HCE's only is fine as long as your document permits it.

OK, great.  So if the document specifies a different amount to the HCE that is permitted?

[Belgarath]

It doesn't need to specify a specific, lower amount, (although it can) but typically it would have some language/election that allows a discretionary safe harbor contribution to one or more of the HCE's, as long as that amount is no more than what is allocated to the NHCE's. You'll have to check your document.