out of plan Rewards for 401(k) deferrals?

[chuTzPA]

Are rewards or incentives for participants who defer certain rates, or increase their rates of deferral during the year, allowed outside of the plan? Inside the plan we have Match, outside could be some kind of non-(or not so)-monetary reward like a gift card of certain levels based on rates of deferral or rates of increase?

Example, when analysing year end data, employees who defer as follows get the following:

6% - $100 gift card, 3-5% - $50 gift card, 1-2% - $25 gift card

I admit I have not thought this through, and wonder the role of nondiscrimination testing, but I have been tasked to look at non-traditional non-plan design related ideas for boosting partipation rates without auto features.

[Mike Preston]

Not allowed.

[GMK]

Auto enrollment is easy and it boosts participation.

A safe harbor match could take care of other issues that I sense might be in play.

[Mike Preston]

See 1.401(k)-1(e)(6) "Other benefits not contingent upon elective contributions"

[chuTzPA]

thanks folks. still pondering nontraditional approaches, but that helps a lot!