When you have a SH match, does it have to go along with the typical "100% of the first 3%... etc" ? I have a new client that wants (has) the following:

2 401K plans..... 100% vested at all times

Plan 1 has a 4% max deferral limit in which they match 200%
Plan 2 there is no limit to what they can defer of course as long as they do not go over the 402g limit.

Would plan 1 be considered a SH plan?

Thanks

Plan 1 - it is not a safe harbor plan unless the document says it is a Safe Harbor plan and notices are given. The match cannot even be considered a QMAC unless it has the same restrictions as the deferrals.

Plan 2 - if it must be aggregated with plan 1 to pass 410(b) or any other testing, then all plans must either be Safe Harbor or Not. Also watch other B,R,Fs if aggregating.

We need more information.

I understand that it would need to be checked a SH plan for it to be one... that simply based on the formula it wouldnt be deemed a SH. I have never had 2 401k plans for the same client... didnt know if since one was a SH then it would eliminate testing for the other.

First... Plan 1... would that pass as a SH formula? what do you mean "same restrictions as the deferrals"?

Sorry for my ineptness with acronyms.. B,R,Fs?

"same restrictions as the deferrals"

A safe harbor contribution is essentially the same as a QNEC. The withdrawal restrictions on a QNEC are the same as deferral contributions. That's all he/she is saying.

I'm assuming that Plan 1 is a Safe Harbor plan and Plan 2 is not.

Plan 1 can be a Safe Harbor plan, while Plan 2 is not. However Plan 2 can not be permissively aggregated with Plan 1 to pass testing. So Plan 2 must pass testing on it own. So a problem would arise, for example, if Plan 2 failed coverage in any given year. You would also have issues if any HCE was allowed to participate in both plans.

BFR = Benefits, Rights, & Features

Thank you. I appreciate your help.

This ia a new client... and actually I am not even responsible for the admin.. just restated the docs to implement some changes they wanted. I wanted to give them the option of a SH before we go to print with the changes.