Age Based Tiered Match

[Guest IRISH79]

Employer has inquired if following match structure would pass nondiscrimination testing:

For participants under age 35, 100% on contributions up to 1st 6% of Comp

For participants age 35 to 49, 150% on contributions up to 6% of Comp

For participants age 50 and above, 200% on contributions up to 6% of Comp.

Would this structure be subject to the gateway test (lesser of 5% of 415 comp or 1/3 of the highest HCE)?rate?

[J Simmons]

I don't think so, but it would need to pass ACP testing, and depending on the mix of HCEs in the differing age groupings, it might not.

[austin3515]

a) This has nothing to do with "gateway" at all. that relates to "Cross-tested" profit sharing contributions.

b) This formula may or may not pass the ACP test, but the test is run the same way you would run any other ACP test. The fact that the formula is tiered has no effect on the ACP test.

c) What you do need to make sure of is that each tier of matching contributions passes the nondiscriminatory classification test because each rate of matching contribution is a benefit right or feature.

I suggest you get assistance from someone who specializes in retirement plan administration. This could be equated loosely with "do-it-yourself" open heart surgery (of course, the stakes are not nearly as high, but you get the idea!).

[AndyH]

Austin's sucessfully firing rockets out of all barrels with that reply.