Safe Harbor match with additional discretionary match

[John Feldt ERPA CPC QPA]

Can a safe harbor match plan with an ACP-free additional discretionary match apply a 1-year of service eligibility requirement for the regular safe harbor match and apply a 2-years of service eligibility requirment for the ACP-free additional discretionary match?

[ETA Consulting LLC]

No, you know better than that

[John Feldt ERPA CPC QPA]

But if the plan was not safe harbor, it could have a 2-year eligibility wait for matching (with 100% immediate vesting), right?

[Kevin C]

Here is your problem:

1.401(k)-3©(4)Limitation on HCE matching contributions.—

The safe harbor matching contribution requirement of this paragraph © is not satisfied if the ratio of matching contributions made on account of an HCE's elective contributions under the cash or deferred arrangement for a plan year to those elective contributions is greater than the ratio of matching contributions to elective contributions that would apply with respect to any eligible NHCE with elective contributions at the same percentage of safe harbor compensation.

If you apply two year eligibility for the discretionary piece, an HCE could get a higher match rate than the rate that would apply to an NHCE with less than 2 years of service.

[John Feldt ERPA CPC QPA]

Of course, that's so obvious now. Thanks!

[ETA Consulting LLC]

Of course, that's so obvious now. Thanks!

I do that alot. It's one of the benefits of being a CPC; always thinking and sometimes forgetting to remember the obvious.