"The plan provides a Safe Harbor Non-Elective Contribution (SHNE) and excludes Highly Compensated Employees (HCEs) from safe harbor contribution. In this situation, there are five HCEs in the plan, and the client wishes to provide the SHNE to only two of these HCEs while giving no safe harbor contribution to the remaining three. The question is whether this allocation is allowable under IRS regulations, and if permissible, which specific regulations authorize it."

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"Do people agree that if a plan is designed as a top-hat plan specifically, the concerns outlined here are not applicable? The Morgan Stanley plan does not sound like a plan exclusively for HCEs and management. Sounds like a plan offered widely to all advisors. I assume that is the issue. And I further assume that because the benefits are paid when vested there is no deferral of income anyway which eliminates concerns about 'funding.' Do I have this about right?"

"Is this possible? Another work around we thought of is to exclude HCE's from the safe harbor match and benefit them with a discretionary match. It seems like just limiting compensation would be easier."