Safe Harbor 401(k) Match Discretionary?

[Jilliandiz]

Is it possible to have a 401(K) plan with discretionary safe harbor matching provisions. The idea here would be that if the company does not want to match from year to year, and wants it to be discretionary each year. It would have to be safe harbor though, b/c they fail ADP testing.

Any thoughts?

[Tom Poje]

you can always have a safe harbor 401k that provides a SHNEC (passes ADP) and then have a discretionary match (limited to 4% of comp [not deferred]

note however, the proposed regs say you can not put eligibility conditions on the match.

[Jilliandiz]

So to have the SHNEC...would that mean that contribution goes to all those deferring only or to all those who are eligible to defer?

Thanks again!

[Tom Poje]

the shnec is a 3% (or more) that must go to all employees. A safe harbor is going to require a contribution of some type.

One of the requirements for the ACP safe harbor(e.g. discretionary match) is that the plan passes the ADP safe harbor

[rcline46]

Thinking out of the box.....

You cannot STOP a SHNEC, but you can issue a MAYBE notice and decide next december.

You cannot do a MAYBE on the match, but you can give a 30 day notice and stop it for periods after the 30 days in the notice. So give the SH notice in December and give notice of suspension.

As long as you know ahead of time it seems to work