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Showing results for tags 'fixed match'.
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We have a plan sponsor that implemented a 401(k) Plan in 2016. This is a safe harbor match plan with an additional fixed match and a discretionary match, i.e. uses the triple-stacked match plan design. The fixed match formula is 86.79% on deferrals up to 6% of pay. This was written into the plan, as it is the formula that maximizes the owners for 2016, when we are using a discretionary match of 66.6667% on 6% of deferrals (equals the 4% ACP safe harbor match). I realize that we should have considered drafting this differently because now we will be in a situation where the owners are not maximizing for 2017 under this formula (due to COLA increases). I am curious to know what other administrators are doing: 1) Amending the plan document in advance of each year to increase the fixed formula based upon the COLA increases OR 2) Drafting the original plan documents in such a way that amendments each year will not be necessary and owners will still maximize contributions. This could be something like including a 100% fixed match on deferrals up to 6% and then determining the discretionary match (ACP safe harbor) to maximize. The problem here is that the plan sponsor would be committing to a higher fixed match than would be necessary.
