deferrals into the plan — regardless of whether they are excluded for other plan benefits, or whether they actually defer into the plan — then employers generally must also permit them to receive safe harbor matching or nonelective contributions. This is because Treasury Regulations (Treas. Regs.) require that all non-highly compensated employees (non-HCEs) eligible to make elective salary deferrals receive the safe harbor matching (Treas. Reg. 1.401(k)-3(c)(1) or nonelective (Treas. Reg. 1.401(k)- 3(b)(1)) contribution. Employers may actually exclude highly compensated employees (HCEs) from receiving safe harbor matching or nonelective contributions, but this is not commonly done, given the reality that plan provisions that discriminate against HCEs are generally not adopted. As a practical matter, it is likely that most employees who are not permanent full-time employees — such as interns — will be non-HCEs, and therefore would be eligible to receive the safe harbor contribution if eligible to defer into the plan. If the employer fails to provide the safe harbor matching or nonelective contribution to a deferral-eligible class of nonHCEs, the plan will be considered to have an operational failure. The options to correct this type of failure will depend on whether the employer failed to follow other safe harbor requirements, as detailed in Treas. Regs. 1.401(k)-3 and 1.401(m)-3. If the failure is limited to failing to provide a safe harbor contribution to eligible non-HCEs, the plan may consider correcting by making the appropriate safe harbor contributions, adjusted for earnings, through the Self Correction Program (SCP) within the IRS Employee Plans Compliance Resolution System (EPCRS). If the employer also failed to provide a required safe harbor notice, the plan may consider a correction using either self-correction procedures or under the Voluntary Correction Program (VCP), with IRS approval, to ensure that there will be no loss of safe harbor benefits. These safe harbor benefits include being deemed to satisfy ADP and ACP testing and top-heavy minimum contribution requirements. (It should be noted that by making certain additional employer contributions in addition to ADP and ACP safe harbor contributions — such as making an employer profit-sharing contribution, or an additional non-safe harbor matching contribution — top-heavy contribution requirements will no longer be deemed satisfied.) Most qualified retirement plan documents allow an employer to tailor a plan to meet its specific needs, including defining the eligibility requirements for employees to enter and participate in the plan. 9 Colorado Banker
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