2 safe harbor plans in the same plan year

Some background:

1. Client currently has a safe harbor match plan (Plan 001) that was restated for Cycle 3 effective January 1, 2022. Document was executed December 2021. I am not aware that this plan has been frozen any time in 2022.
2. Client has decided to add a Cash Balance Plan for 2021 but determined that the profit sharing formula in the current 401(k) Plan for 2021 would not work.
3. Initially, the client requested a new profit sharing only plan (Plan 002) effective for 2021.
4. They have now come back and ask that we add deferrals to Plan 002 effective October 1, 2022 and add safe harbor nonelective at the same time.

My observations:

1. I agree that the client can establish a profit sharing only plan effective January 1, 2021 so long as the document is executed by the due date of the client's extended corporate tax return.
2. Client is an S-corporation, so document would need to be signed by 9/15/22.
3. I know that it is allowable to add safe harbor to a current PS only plan so long as you allow for 3 months of deferrals. So, under normal circumstances, deferrals and safe harbor could be added no later than October 1st and would need to be executed by 10/1/2022, which is not an issue since the document for Plan 002 will need to be signed by 9/15.
4. My concern is the existence of Plan 001 and that the same employees would be covered under both plans in the same plan year.

Can a client sponsor both a safe harbor match plan (Plan 001) and a safer harbor nonelective plan (Plan 002) in the same plan year?  Any guidance and support you can provide would be greatly appreciated. Thanks.

I don't think so, but I'm more on the CB side of the equation so I don't know that unequivocally. What possible advantage would they get to do this? Just retroactively adopt the PS-only 002 for 2021 with the desired allocation formula, merge it into the existing plan 001 at 12/31/2022 and prior to 12/31/2022 (or earlier if you still send notices) amend the existing plan 001 effective 1/1/2023 for the SHNE and PS allocation formula from 002. And of course, timely adopt your new CBP 003 effective for 2021. Isn't this standard operating procedure?

If they're trying to get deferrals out of 001 and into 002 for 4Q2022 to save on the SHM and get cross-testing benefit of SHNE, I don't think that flies. It's a trap!