Guest RW Posted March 10, 2000 Posted March 10, 2000 A 401(k) plan limits participant contributions to 15% of eligible compensation. What issues arise if increase this limit for nonhighly compensated employees only? Employer matches $.50 on the dollar up to the first 6% of pay.
Alan Simpson Posted March 10, 2000 Posted March 10, 2000 Why not put the limit the same for all employees (NHCE and HCE)? Assuming your HCE earns $80,000, or more, the most they can defer is $10,500 for the 2000 plan year which is only 13.125% (10,500 / 80,000 = 13.125%). Using the matching listed in your posting it would not increase the matching since it stops at 6%. Therefore, you would be giving all participants the same maximum percentage level and can point to the regulations for the HCEs not being able to defer more. [This message has been edited by Alan Simpson (edited 03-10-2000).] [This message has been edited by Alan Simpson (edited 03-10-2000).]
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