quick question

[Guest A_Dude]

Can an employer for a SH Non-Elective plan make it per pay period without a true-up?

[austin3515]

Yes, if it doesn't make any mistakes all year. 3% of pay for one pay-period for 52 weeks should be the same as 3% of pay for the whole year. Your thinking of the matching contributions where the specific pay-periods in which the deferrals were made will cause a difference between what was done each pay-period and an annual calculation. Because it's just 3% of comp on the SHNEC there should never be a difference. We have true-ups all the time on SHNECS and they all relate to snafus.

[chc93]

Yes, if it doesn't make any mistakes all year. 3% of pay for one pay-period for 52 weeks should be the same as 3% of pay for the whole year. Your thinking of the matching contributions where the specific pay-periods in which the deferrals were made will cause a difference between what was done each pay-period and an annual calculation. Because it's just 3% of comp on the SHNEC there should never be a difference. We have true-ups all the time on SHNECS and they all relate to snafus.

Per-period match generally has options to do a true-up or not. Is there a similar option for pay-period SHNEC.. such that your snafus won't require a true-up.

[austin3515]

Let's say 3% of each of 10 gross paychecks is $50. Do you not agree that after 10 pay-periods, 3% of the same gross wages would be $500? If you have only deposited $475 then somewhere along the way you snafued. And snafued is laymen for operational defect.

So, there is no way to avoid a "true-up" which is the same as saying you are required to calculate the SHNEC correctly every pay-period.

[rcline46]

Actually, for those making over the pay limit, the per payroll option is just begging for an over contribution. Otherwise I agree with Austin3515.