Safe harbor nonelective, eligibility requirements based on service different than deferrals

Questioning myself a bit on this. Suppose you have a plan that allows immediate deferrals, but for eligibility requirements for the safe harbor nonelective, wants to have 3 consecutive months with 250 hours to be eligible. Now, automatic top heavy exemption is blown, but that's immaterial for this plan. Shouldn't be any problem with this, if you pass testing using the OEE, right? Or is there something else I'm missing? 

Most likely this isn't going to be an issue anyway, as prospective client most likely doesn't have any HCE's...

42 minutes ago, Belgarath said:

Questioning myself a bit on this. Suppose you have a plan that allows immediate deferrals, but for eligibility requirements for the safe harbor nonelective, wants to have 3 consecutive months with 250 hours to be eligible. Now, automatic top heavy exemption is blown, but that's immaterial for this plan. Shouldn't be any problem with this, if you pass testing using the OEE, right? Or is there something else I'm missing? 

This should be fine. The group of employees who met age 21/1 year of service are all covered by the safe harbor, so no ADP test on that group. The otherwise excludable group has to be ADP tested, but you could count the SHNEC as a QNEC in the test if you wanted.

45 minutes ago, Belgarath said:

Most likely this isn't going to be an issue anyway, as prospective client most likely doesn't have any HCE's...

None? Why safe harbor at all then? If they really want to make a 3%, fully-vested contribution, just do it as a discretionary contribution, that way they're not subject to the rules of 2016-16 if they want to change it later.

Thanks. Agreed if they have no HCE's, but when I said "most likely" that's my own assessment, without census information. We'll see.

While these types of arrangements are not always complicated, I find them a little more mentally draining.  I always wonder "what am I missing"?

As a practical matter....why the 3 months?  Sync up the 2 eligibilities for simplicity and efficiency.....  just my 2 cents.