Guest PJW Posted December 4, 2001 Posted December 4, 2001 If a safe habor plan (match method) offers catch-up contributions is it required to match those catch-up contributions to stay within the safe habor of 401(k)(12)?
R. Butler Posted December 4, 2001 Posted December 4, 2001 A safe harbor 401(k) plan does not have to match the catch-up. I really don't even see a scenario where they would be matched in a safe harbor plan.
Guest PJW Posted December 4, 2001 Posted December 4, 2001 Could you please elaborate on why they would not have to be matched? The catch-up rules provide no guidance on matching contributions (or the safe harbors) which leads me to believe that they operate in the same manner as matching contributions on ordinary deferrals.
R. Butler Posted December 4, 2001 Posted December 4, 2001 To be eligible for the catch-up you must have already contributed the maximum deferrals allowed under the plan. A plan cannot restrict deferrals in such a way that it would prevent a participant from receiving the full safe harbor match. Therefore, before a participant is even eligible to make a catch-up contribution, he/she has already received a sufficient match to meet safe harbor.
Tom Poje Posted December 4, 2001 Posted December 4, 2001 see www.trustandestates.net/EGTRRA/Ice_EGTRRA_Pensions.htm in particular, 3.5 According to committee reports, employer can match catch-up contributions. However, the match would be tested under the ACP test. therefore, it is apparent that it is optional to match catch-ups. what is there effect on a safe harbor? 'the butler did it' - no wait, as Butler explained, it is most likely not to come into play - assumic the basic match is made. However, the match could be Enhanced Match, so then it would make a difference, or possibly the discretionary safe harbor match as well. But we all know that R Butler is referring to the most likely scenario. Disadvantage of not matching catch ups... example if hce has to get refund for failed test, the amount could be treated as a catch up. but if match is related to the deferral, then this match would have to be forfeited, otherwise the ees rate of match is greater than everyone else.
Guest PJW Posted December 4, 2001 Posted December 4, 2001 An enhanced match is exactly what I am dealing with, I should have made that clear. Thanks for all of your help.
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