Nassau Posted June 19, 2007 Posted June 19, 2007 If a client is considering the new automated enrollment PPA Safe Harbor (enroll at 3%, increase up to 6% cap) to eliminate nondiscrimination testing requirements. Their current match is 100% up to 7.5% of compensation (eligible for match after one year, 100% vested, same distribution reqs. as pretax, etc.). Do they have to change the current match formula in order to meet the new PPA Safe Harbor?
J Simmons Posted June 19, 2007 Posted June 19, 2007 Won't meet the safe harbor unless you drop the cap on matching contributions from 7.5% of the EE's pay to 6%. IRC sec 401(m)(12)(B) and 401(m)(11)(B)(i). Can a new EE participate--i.e., make elective deferrals or be auto enrolled--during that first year, the one before qualifying for the match? If so, I think that too would be problematic. John Simmons johnsimmonslaw@gmail.com Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.
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