Safe Harbor Enhanced Match

[DP]

I have a client who wants to adopt a Safe Harbor 401k Plan using the following match: 100% on the first 3% and 50% on the next 3%. It definitely meets the first two Safe Harbor Enhanced Matching Formula requirements - that the match can't exceed 6% of compensation, and that the matching rate doesn't increase as the rate of contributions increases. I'm not sure I understand the third requirement: "the match rate at any rate of elective deferrals may not be greater for an eligible HCE than for an eligible NHCE." Could someone please explain this last requirement? Thanks.

[Tom Poje]

conceivably you could write a formula:

safe harbor match for nhces is 100% on first 3%, 50% on next 2 %

hces 100% of the first 4%.

if everyone deferred 5% everyone would get 4%.

however, the rate for the hces is better at one point in time.

or you might have 2 divisions with the same formulas.

as long as no HCEs are in the one division it would be possibly to have that formula accrue at a faster rate.