Enhanced SH match of 125 % on 6%

[Jim Chad]

I nwant to double check my understanding. It's been a long week.

Safe Harbor match can only match deferrals up to 65 of comp.

Is there any limit on how high the match can be on a safe harbor match?

[Jim Chad]

This is what I meant to have. I hit the post button too soon.

I want to double check my understanding. It's been a long week.

Safe Harbor match can only match deferrals up to 6% of comp.

Is there any limit on how high the match can be on a safe harbor match?

[BG5150]

Enhanced SH Match can be as high as you want it for ADP purposes. Any SH match on deferrals over 6% does not satisfy ACP SH.

(That doesn't answer your question, but I thought it was worth mentioning.)

[AKconsult]

There are 2 requirements:

1. A match will satisfy safe harbor only if the match is not made with respect to employee contributions that exceed 6%.

2. If the match formula is written to be "discretionary" then it will satisfy safe harbor as long the actual amount contributed does not exceed 4% of compensation. 125% of 6% is equal to 7.5% so this formula could NOT be used for a safe harbor match plan that is "discretionary". However, if the plan document specifically states that the safe harbor match will be 125% of the first 6%, then that is fine because the formula is no longer discretionary and the requirement from item 1 is satisfied.

[John Feldt ERPA CPC QPA]

For example, a SH matching formula of 300% of the first 6% of pay deferred is okay - it does not cause the plan to fall out side of safe harbor status, and if that's the only employer contribution, the plan is top-heavy exempt.

But, if you did 100% of the first 6% deferred for your SH match, you can then add:

200% of the first 6% of pay deferred as a fixed employer match at the same time. Now this fixed match can be subject to a vesting schedule, but to keep SH status (no ACP test), you cannot have a last day or any other requirement, other than a deferral requirement, in order to get the match. If these are the only matches in the plan, you can still be top-heavy exempt.

The match of course could be limited by 415.

Then there's the triple-stacked match, too.

[Jim Chad]

Thanks, everyone for the confirmation. I swear.....there are days when I am not sure of my own name.

[12AX7]

You may have TH issues if there were different eligiblity requirements for the Salary Deferral and SH allocations portions of the plan (e.g. immediate eligibility for deferral and 1 YOS for the SH). This is perhaps getting a little off topic, but thought to mention it since John brought up the TH exemption example.

[John Feldt ERPA CPC QPA]

good point!