Safe Harbor Match "True UP"?

[rodin011]

Employer SH matches every payroll using the correct formula. However, many employees have huge swings in compensation from payroll to payroll, as they are also paid commissions. Therefore, the deferrals of participants that defer a constant dollar amount are sometimes under 3%, between 3 and 5% or over 5%.

Consequently, at the end of the plan year the total SH match (that is correct on a payroll basis) will many times be out of range on an annual deferral percentage basis.

Does the employer have to make the additional match contributions or withdrawals after the plan year end in order to satisfy SH formula on an annual basis?

Thx

[jkdoll2]

Employer SH matches every payroll using the correct formula. However, many employees have huge swings in compensation from payroll to payroll, as they are also paid commissions. Therefore, the deferrals of participants that defer a constant dollar amount are sometimes under 3%, between 3 and 5% or over 5%.

Consequently, at the end of the plan year the total SH match (that is correct on a payroll basis) will many times be out of range on an annual deferral percentage basis.

Does the employer have to make the additional match contributions or withdrawals after the plan year end in order to satisfy SH formula on an annual basis?

Thx

If the document says it is based on annual compensation - then yes - you have to true it up. If the document says it is based on per payroll - then no.

[Below Ground]

Depending upon what the plan document says, the Safe Harbor Match will either be based on the per payroll period pay, or subject to annual true-up. You need to check the specific plan document.

[Blinky the 3-eyed Fish]

I seem to recall that if you don't true up, the SH match deposits must be made quarterly. I am not sure how this would be addressed in the document should the actual deposits be made too late. Would it revert back to the annual method? My guess is no, as I doubt that would pass muster.