SH Triple Stack Match

[Guest Jstriley]

I have a proposal that I am currently working on with a triple stacked match. This will be a new plan and it appears that it will be top heavy the first year. If a triple stack match is used, do the safe harbor rules apply to the top heavy requirement or since additional employer contribution are being made, is the minimum top heavy contribution applicable?

Jodie

[Below Ground]

If the only contribution being allocated is safe harbor contributions, the plan gets a "pass" on the Top Heavy Minimum. Make sure the plan is safe harbor for ACP too. If so, then the only contributions under the scenerio defined will be safe harbor contributions. That is, deferrals and matching that is exempt from ACP Testing given 401(k) Safe Harbor Status.

[ESOP Guy]

I will admit what I know about S.H. 4K plans would fill a small pamphlet. I was curious about the term triple stack match, a term I had never heard before.

I found a rather old thread discussion what these were and the rules behind it. They seem to be commenting about your question. The real question is, “have the rules changed much since this was written?”

But here you go.

http://benefitslink.com/boards/index.php?s...0&hl=Triple Stack Match&st=0

[QNPG]

I have a proposal that I am currently working on with a triple stacked match. This will be a new plan and it appears that it will be top heavy the first year. If a triple stack match is used, do the safe harbor rules apply to the top heavy requirement or since additional employer contribution are being made, is the minimum top heavy contribution applicable?

Jodie

So long as you stay within the parameters of the ADP/ACP safe harbor (see below), you are still exempt from any testing and TH requirements. The amount of a discretionary safe harbor match cannot exceed 4% of compensation, and the match cannot apply to the amount of a deferral that exceeds 6% of compensation.

§1.401(m)-3 Safe harbor requirements.

(d) Limitation on contributions

(1) General rule. A plan that provides for matching contributions meets the requirements of this section only if it satisfies the limitations on contributions set forth in this paragraph (d).

(2) Matching rate must not increase. A plan that provides for matching contributions meets the requirements of this paragraph (d) only if the ratio of matching contributions on behalf of an employee under the plan for a plan year to the employee’s elective deferrals and employee contributions, does not increase as the amount of an employee’s elective deferrals and employee contributions increases.

(3) Limit on matching contributions. A plan that provides for matching contributions satisfies the requirements of this section only if

(i) Matching contributions are not made with respect to elective deferrals or employee contributions that exceed 6% of the employee’s safe harbor compensation (within the meaning of §1.401(k)-3(b)(2)); and

(ii) Matching contributions that are discretionary do not exceed 4% of the employee’s safe harbor compensation.

[Tom Poje]

for everyone's protection I would make sure I would have a very clear explanation on the deferral election form, something like

"I realize I am an idiot for not deferring because the match is somewhere between X% and Y%. Thats free money. but I still choose to defer 0% anyway."

seriously though, if few or no NHCEs defer, it will have the appearences of plan set up for the sole benefit of HCEs and the NHCEs have no knowledge of it. The last thing you want is an NHCE going to the DOL and saying they knew nothing about it, even if they in fact had chosen 0% deferral, but there is no record of it.