FAQ 520: Budget--Sole prop budget not treating safe harbor match as staff expense


The Partnership Budget Worksheet is reducing earned income by profit sharing contributions to non-owners, but not the safe harbor match. I selected the profit sharing and safe harbor match sources when I ran the budget calculations and Partnership Budget report. The safe harbor match is coded as an employer source type, and the plan is coded as a 401k. What am I doing wrong?


The source 5 safe harbor match contribution is actually generated through source 3, but then stored in source 5 per the coding on the Benefit Limits (BENLIMIT) screen. Because of this tie-in, the budget should be set up to calculate source 2, 5 AND 3, and it will then assign the total staff expense, including employer and safe harbor match. This source selection is necessary since the source 3 match could be greater than the amount directed to source 5 as a safe harbor match. You'll just need to remember that if the safe harbor match is calculated based on your coding in the source 3 specs, you will need to check both sources when running the budget routine and the Partnership Budget worksheet. If you do not want to do this, you'll need to set up the safe harbor match formula independently in source 4-20, rather than tie it to the source 3 formula through the safe harbor coding on the Benefit Limits screen.