Basic Safe Harbor Match in 1 Person Plan

Have a plan that covers just the owner who has Sched. C income. The match was done based on what was given for Sched. C income. That was adjusted later on resulting in a match figure that was $54 higher than the original one. Owner did not want to put in the extra $54 for himself. Is this allowable? Can the owner choose to put in less of a match than what meets the formula? Would this raise a flag with the IRS?

Depends upon your document. Most of them that I see now allow the match for Highly Compensated Employees to be discretionary. If so, no worries.

Is $54 really that big of a deal for him to contribute?

How much was the match to begin with?

No one is asking the obvious question - WTF would you do a solo owner-only 401(k) with a SHM?

Or, throw it in early for next year.

18 hours ago, CuseFan said:

WTF would you do a solo owner-only 401(k) with a SHM?

In anticipation of other employees?

On 11/8/2021 at 7:48 PM, coleboy said:

Is this allowable?

Assuming the doc does not exclude him from the SHM, then he is required to fund the $54 to himself.

5 hours ago, BG5150 said:

In anticipation of other employees?

Yeah, I could see that if it was imminent, but I would keep as flexible as possible while owner-only and then amend when needed, as needed, as the situation changes, and then this sort of hassle/inconvenience is avoided, but that's me. 

For those that want to know, the year in question, my client did not have any eligible employees! She is quite willing to put in the $54. I was just asking whether it would raise any flags if she chose not to.

Bill your time for consulting on this, it will be a lot more than $54!

3 hours ago, coleboy said:

For those that want to know, the year in question, my client did not have any eligible employees! She is quite willing to put in the $54. I was just asking whether it would raise any flags if she chose not to.

It wouldn't raise a flag, per se. The IRS doesn't know how what is due to a Plan, only what is reported on the Form 5500.