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Safe Harbor 3% for partner


Pammie57

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I have a plan where the partners are saying they are not going to fund their own safe harbor but put in the 3% for all other employees.  Is there something that allows them to NOT put the safe harbor in for themselves?  

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Or, if there are non-owner HCEs and want to provide SH to them, you can also limit SH to non-Key employees. 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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You may amend the plan under Notice 2020-52 to prospectively eliminate the contribution for highly-compensated employees. A 30-day notice is required. A safe harbor contribution is still required to be made on compensation earned before the amendment is adopted.

Example: Amendment adopted 2/15/24 that eliminates contribution for compensation earned after 3/15/24. Notice given to HCEs on 2/15/24 notifying them of change. Safe harbor contribution made for HCEs for compensation earned through 3/15/24. No safe harbor contribution made for HCEs for compensation earned 3/16/24 - 12/31/24 or after. 

 

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And if the HCEs get their 3% as profit sharing rather than as the safe harbor nonelective, you get to impute disparity on it when general testing with other benefits. 

You'll appreciate that difference exactly once in your career but it'll be worth it!

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