Pammie57 Posted February 13, 2024 Posted February 13, 2024 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?
Popular Post C. B. Zeller Posted February 13, 2024 Popular Post Posted February 13, 2024 To be a safe harbor 401(k) plan, you only have to make safe harbor contributions to NHCEs. However you have to follow the document. If the document says that HCEs will get the safe harbor contribution, then they have to get it. They can't retroactively eliminate it even for HCEs since that would be a prohibited cutback. Lou S., Bill Presson, Belgarath and 3 others 6 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
Bill Presson Posted February 13, 2024 Posted February 13, 2024 And this is why we don't have the 3% SH go to HCEs...flexibility before they even think they need it. Bri, C. B. Zeller and Belgarath 3 William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070
CuseFan Posted February 14, 2024 Posted February 14, 2024 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
EBP Posted February 14, 2024 Posted February 14, 2024 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.
Bri Posted February 14, 2024 Posted February 14, 2024 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! Bird 1
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