When is it better to make the 3% nonelective safe harbor contribution

[chris]

Examples of when it's advantageous to make 3% nonelective safe harbor contribution to a plan other than the 401(k) plan?

[wmyer]

It's good when you have a problem with the 15% deductibility limit for profit-sharing plans. That way you can make the 3% SHNEC in the pension plan and max out deferrals in the profit-sharing plan.

[Guest RJM]

Also advantageous if Money Purchase Pension Plan is already in existence. Note, however, 3% SafeHarbor cannot be part of an integrated formula.

[MWeddell]

I've also seen situations where the 3% is made to the ESOP and the ESOP (for compliance, administrative, and communications reason) is run as a stand-alone plan.

[Guest susan w]

It is my understanding that you could have different eligibility requirements for the two plans. For example, if you wanted to allow immediate deferrals in the 401(k)plan, you could impose a one-year wait for the second (MPP) plan where the safe harbor contributions are made. I heard this at the NIPA conference this week, but have not seen it in practice.