JROB Posted March 12 Posted March 12 I have a plan with a 3% non elective Safe Harbor. TPA is saying that it is permissible for the sponsor to deposit the 3% on a payroll by payroll basis - something i haven't seen and something that is not notated in the document. TPA is also saying that since it is funded payroll by payroll there is no "true-up". Usually, 3% non electives are contributed at end of year. What am I missing and has anyone else experienced this?
Popular Post Paul I Posted March 12 Popular Post Posted March 12 It is permissible, it is not required, and there are pros and cons. Some companies fund the SHNEC with each payroll because the contribution is 100% vested and not subject to other allocation conditions (like a last day rule). They do this as a convenience and feel it helps them manage their finances. The TPA should know better than to say there is no "true-up". The SHNEC is not like a match. A plan can specify a time period for funding the match that is more frequent than annually. The SHNEC requires each participant receives must the the SHNEC percent of annual plan compensation. Payroll is notorious for having adjustments from pay period to pay period, and for having challenges reporting plan compensation should the definition of plan compensation be something other than 3401(a) W-2 compensation. The prudent plan administrator, payroll and TPA all would double check after year-end that everyone received the SHNEC they were due. CuseFan, EBP, Lou S. and 3 others 6
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