Santo Gold Posted April 12, 2018 Share Posted April 12, 2018 Can a 401(k) plan have a tiered match contribution based on service? There will be no HCEs eligible to be in this plan. For example: · 0% match for individuals with less than 1 year of service · 100% match up to 1% of EE contribution for 1-3 years of service · 100% match up to 2% of EE contribution for 3-5 year of service · 100% match up to 3% of EE contribution for 5-10 year of service · 100% match up to 4% of EE contribution for 10-20 year of service · 100% match up to 5% of EE contribution for 20+ years of service Link to comment Share on other sites More sharing options...
Tom Poje Posted April 12, 2018 Share Posted April 12, 2018 the answer is yes, but that depends on your document the FT William document has up to 4 choices available. if there were HCEs you would have BRF to test. 9. Years of Service a. The Matching contribution will be made according to the schedule below: i. Years of service % of Matched Employee Contributions ii. Years of service % of Matched Employee Contributions iii. Years of service % of Matched Employee Contributions iv. Years of service % of Matched Employee Contributions b. [ ] Only Matched Employee Contributions that are not in excess of % of the Participant's Compensation shall be matched. c. In determining years of service in this D.9, the following service shall be used: i. [ ] Years of Eligibility Service ii. [ ] Years of Vesting Service d. Enter the number of Hours of Service necessary to earn a year of service described in D.9a: NOTE: D.9 is only applicable if D.6e is selected. NOTE: The first tier of Matching Contributions in D.9a.i shall be available no later than the period described in 410(a)(1). Link to comment Share on other sites More sharing options...
Gadgetfreak Posted April 12, 2018 Share Posted April 12, 2018 Even with the FTW Document, couldn't you just say it is a "discretionary formula"? ERPA, QPA, QKA Link to comment Share on other sites More sharing options...
Tom Poje Posted April 12, 2018 Share Posted April 12, 2018 I don't think so, my understanding is by 'discretionary' it refers to the amount that can be contributed, not that each person is in their own 'rate group' so each person can receive a different amount at the discretion of the employer (much even trying to do BRF testing if you could). but I've been wrong before.... one document language would allow some variance based on location, but I've never seen language that treats, as I said, each person in their own separate group. A. Matching formula. a. [ ] Employer matching contribution as follows (select 1. or 2.): 1. [ ] Discretionary. The Employer may make matching contributions equal to a discretionary percentage, to be determined by the Employer, of the Participant's Elective Deferrals. a. [ ] Discretionary based on business units or location. The Employer may determine a separate discretionary matching contribution for Participants working in different business units or locations. Link to comment Share on other sites More sharing options...
Bob the Swimmer Posted April 12, 2018 Share Posted April 12, 2018 Most documents allow you to write in your own formula but it will need to pass testing and that can be problematic if a lot of your longer-service ee's are HCEs Lou S. 1 Link to comment Share on other sites More sharing options...
MWeddell Posted April 16, 2018 Share Posted April 16, 2018 Original post says that there are no HCEs so there will be no BRF testing. You might want to prepare the document so any HCEs who are nonexcludable get the 100% on 1% match if you want to permanently eliminate the need for BRF testing on the available rate of match. Link to comment Share on other sites More sharing options...
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