Safe Harbor Match and Discretionary Match

[Guest abajeb]

This is probably a dumb question, but I just need to ask it. If you have a plan doing the basic SH match, can you also do a discretionary match at the end of the year? If so does the plan still qualify for ACP and ADP SH? My understanding is that you can give up to 4% of pay additional as discretionary match and still be SH.

[Tom Poje]

the SHMAC satisfies ADP safe harbor, and ACP safe harbor as well.

you are correct, a discretionary match can be made as well, as long as it is capped at 6% deferred up to 4% of comp. in other words you could have a discretionary match of 66.67% up to 6% deferred because that would cap out at 4% of comp. beginning in 2006 you can NOT have eligibility requirements on the discretionary ( hours or last day) but they can be subject to vesting.

As the question has come up before, I see nothing dumb about it.