safe harbor for those still employed on LDOY only

I doubt this is possible but I wanted to be 100%.  We've always provided the 3% nonelective safe harbor to all eligible regardless of employment condition on last day or hours worked.  

A large client does not want the terminated employees to get 3% as the cost is fairly high.  A 3% profit sharing plan to those still employed does pass coverage but the plan will not pass ADP and the client is firm - no corrective distributions.    

Is it possible to test the terminated employees ADP (there are no HCEs in that group) and only give the safe harbor to those still employed?  The plan is not top heavy.

Just taking a wild shot on this. Thank you,

Tom

No. If initial eligibility is satisfied for 3% SHNE and someone enters the plan they get the 3% SHNE for however long they were employed and in the plan, whether a day, a week or through year-end.

Cuse is correct. If your client needs proof, you can point them to IRC sec. 401(k)(12) which requires that the contribution be made to "each employee who is not a highly compensated employee and who is eligible to participate in the arrangement." Also see Example 4 in 1.401(k)-3(c)(7) of the regulations which is exactly on point that you can not impose a last day requirement on a safe harbor contribution.