When can you add adp safe harbor and match contributions to a plan if its a calendar year
plan and you want to add for current year ? - ANSWER When adding a 401 ( k ) feature to
an existing profit - sharing plan , you can add a matching safe harbor for the initial year pro-
vided there are at least 3 months in the plan year . A nonelective safe harbor feature can be
added up to the last day that the return of excess contributions are due ( 12 months follow-
ing the end of the plan year ) .
Formula that satisfies traditional ADP safe harbor - ANSWER The tradition ADP safe har-
bor matching contribution must be, for each rate of deferral, at least equal to 100% of the
first 3% of deferrals plus 50% of deferrals on the 2% of compensation deferred. A fixed
matching contribution of 100% on the first 3% of compensation deferred, plus 75% on the
next 3% of compensation deferred satisfies this requirement.
Design based allocation method using permitted disparity - ANSWER If integration level is
100% of TWB, max disparity percentage is 5.7%
What's included in annual additions? - ANSWER Elective deferrals, employee after tax
contributions, ER contributions, forfeitures
Cross testing allocations are designed based safe harbor method ? - ANSWER False
When must compensation be paid to terminated employee? - ANSWER 2.5 months after
severance or end of limitation year in which employment terminated
You can reduce or suspend safe harbor when - ANSWER You provide notice to pots at
least 30 days prior to change
Amendment
Ppts have reasonable time period to change elections
1
, SH contributions made through effective date of amendment
Operating at economic loss
EACA - ANSWER Eligible Automatic Contribution Arrangement.
QACA - ANSWER Qualified Automatic Contribution Arrangement
When can safe harbor non elective be added to a plan? - ANSWER Can be added as late
as last day of year
If using matching safe harbor contribution when can this be added? - ANSWER Plan must
be amended prior to beginning of plan year
If establishing a new plan, when can this be done? - ANSWER Must be three months prior
to end of year
SH plan notables - ANSWER - SH plans have additional cost and less flexibility
- would have to amend existing plan
- annually plan required to match or nonelective to NHCE
- must notify ppts annually
- plan doc must include provisions
Limit for annual additions - ANSWER Lesser of 100% of compensation or statutory dollar
amount, for 2022 its 61k
Defined by plan limitation year defined in plan doc- 12 month period
Cross testing allocation method how is it grouped and can discretionary contributions be
made to the groups - ANSWER Employees grouped by categories by job service HCE OR
NHCE
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plan and you want to add for current year ? - ANSWER When adding a 401 ( k ) feature to
an existing profit - sharing plan , you can add a matching safe harbor for the initial year pro-
vided there are at least 3 months in the plan year . A nonelective safe harbor feature can be
added up to the last day that the return of excess contributions are due ( 12 months follow-
ing the end of the plan year ) .
Formula that satisfies traditional ADP safe harbor - ANSWER The tradition ADP safe har-
bor matching contribution must be, for each rate of deferral, at least equal to 100% of the
first 3% of deferrals plus 50% of deferrals on the 2% of compensation deferred. A fixed
matching contribution of 100% on the first 3% of compensation deferred, plus 75% on the
next 3% of compensation deferred satisfies this requirement.
Design based allocation method using permitted disparity - ANSWER If integration level is
100% of TWB, max disparity percentage is 5.7%
What's included in annual additions? - ANSWER Elective deferrals, employee after tax
contributions, ER contributions, forfeitures
Cross testing allocations are designed based safe harbor method ? - ANSWER False
When must compensation be paid to terminated employee? - ANSWER 2.5 months after
severance or end of limitation year in which employment terminated
You can reduce or suspend safe harbor when - ANSWER You provide notice to pots at
least 30 days prior to change
Amendment
Ppts have reasonable time period to change elections
1
, SH contributions made through effective date of amendment
Operating at economic loss
EACA - ANSWER Eligible Automatic Contribution Arrangement.
QACA - ANSWER Qualified Automatic Contribution Arrangement
When can safe harbor non elective be added to a plan? - ANSWER Can be added as late
as last day of year
If using matching safe harbor contribution when can this be added? - ANSWER Plan must
be amended prior to beginning of plan year
If establishing a new plan, when can this be done? - ANSWER Must be three months prior
to end of year
SH plan notables - ANSWER - SH plans have additional cost and less flexibility
- would have to amend existing plan
- annually plan required to match or nonelective to NHCE
- must notify ppts annually
- plan doc must include provisions
Limit for annual additions - ANSWER Lesser of 100% of compensation or statutory dollar
amount, for 2022 its 61k
Defined by plan limitation year defined in plan doc- 12 month period
Cross testing allocation method how is it grouped and can discretionary contributions be
made to the groups - ANSWER Employees grouped by categories by job service HCE OR
NHCE
2
