Allowing 401(k) but Excluding From Safe Harbor Match

[metsfan026]

Good afternoon everyone, I hope all is well!

I have a client with about 40 employees, and they want to allow all of them to participate in the Plan.  What they don't want to do is give the Match (which is the Safe Harbor) to a small portion from getting any type of match (less than 5).

Generally I didn't think this was allowed, but I wanted to be sure.  I know if it was a discretionary match, it wouldn't be an issue.  SH, I thought would be but I wanted to confirm

Thanks!

[C. B. Zeller]

Are those 5 people HCEs? If so they could be excluded from the safe harbor.

Otherwise, they could adopt a separate plan for those 5 people, as long as both plans pass coverage separately. But you couldn't do it within a single plan.

[metsfan026]

10 minutes ago, C. B. Zeller said:

Are those 5 people HCEs? If so they could be excluded from the safe harbor.

Otherwise, they could adopt a separate plan for those 5 people, as long as both plans pass coverage separately. But you couldn't do it within a single plan.

That's what I thought.  Thanks!

[austin3515]

The only other exception is with respect to employees who have not met the maximum eligbility provisions. So 3 months of service for 401(k) and 1 YOS for match is allowable, BUT you would lose your top-heavy exemption (if you needed it)...