NYHeel

Yes, it's a safe harbor match and yes, I'm in agreement that this design doesn't work. My only thought was that the percentage of pay deferral election could possibly be viewed against the match eligible pay only and thus the higher ratio of match to deferrals is due to the lower percentage of pay deferral election, when viewed against match eligible pay. But clearly this argument is a stretch.

Someone is asking if a traditional match safe harbor plan can have different definitions of compensation for employee deferrals and employer match. Specifically, they want to know if the definition of compensation for employee deferrals can include bonus but exclude bonus for match eligible compensation. In addition, the plan pays match on a payroll period basis and does not provide a true-up. I'm leaning strongly towards no on this but haven't found anything that specifically excludes this design. I'm worried that the match for an NHCE could be lower than the match for an HCE when compared to deferral eligible compensation. The only way I could see this as allowable is if you only look at match eligible compensation when determining match percentage and you completely ignore deferral compensation. But administratively this would be difficult with a payroll period match and no true-up. There would need to be some kind of mid year true-up after the bonus was paid to make sure those deferrals were taken into account for purposes of match. Any thoughts on this?