"true up" matching contributions on new participants

[Guest LLS]

Our company adopted a 401(k) plan on 1/1/2000 with a safe harbor matching contribution formula on elective deferrals. (the standard safe harbor match - 100% of the first 3% and 50% on the 4th% and 5th%) Participants are eligible on the January 1st or July 1st after having completed a year of service in which they had 1000 hours of work service. We passed out the safe harbor notice yesterday to the July 1st eligible participants and I'm getting ready for the meeting. Question: If someone who becomes eligible July 1 makes $40,000.00 annually and elects to make a 6% contibution, how much is their maching contribution? Is it $800.00 based on $20,000 X 4% max% for their period of eligibility? Or, is their a true up involved since their deferrals will equal $1,200 which is 3% of their comp from 1/1/2000 thru 12/31/2000?

[Guest]

check out a recent article on www.cigna.com/retirement/sponsor/adp_acp.html

"The ADP safe harbor contribution must also be:

based of a nondiscriminatory definition of compensation....the plan may limit the compensation measurement period to the period during which the employee is eligible to participate in the plan."