A small client has two common law employees. The client recently established a cross-tested retirement plan program. Under the defined contribution component element of the cross-tested program, these common-law employees receive/are eligible to make (1) elective deferrals, (2) 3% safe-harbour non-elective contributions and (3) profit sharing contributions.

As the contributions under (1) and (2) above are 100% vested, the client asked if these amounts could be held in a single account. As the profit sharing contributions are subject to a top-heavy vesting schedule, they would be held in a separate account.

Is there anything that would prohibit the client for establising a single account for each employee with respect to elective deferrals and the 3% safe harbour contributions?

Thanks in advance for your thoughts.

Ed

Actually, there could be a single investment account for all three types of contributions. However, the different types of contributions, earnings allocations and the appropriate vesting would need to be accounted for separately on paper.

as WDIK pointed out,you could have a single investment as long as you track things somewhere, and can provide that info to the participants
a reminder that another difference is that it is possible to take a hardship on deferral but not on safe harbor - so its not simply a matter that 'both are 100% vested'