Enhanced Safe Harbor MAtch

[52626]

Employer would like to make the following Safe Harbor Match...

100% of the first 3%

50% of the next 2%

1. in the aggregate better than the basic match

Does the 50% of the next 2 cause this to fail as an enhanced match because it is an escalating formula??

So confused???

Thanks

[Lou S.]

Isn't that the basic match? Did you mean to put a different formula down?

[52626]

Sorry meant to say

100% of the first 3%

and

50% of the next 4%

Does adding the second part cause this to fall outside of an enhanced match

[John Feldt ERPA CPC QPA]

Elective deferrals taken into account for purposes of calculating the enhanced match cannot exceed 6% of compensation. In your example above you have 7% of pay deferred gets the employee a match of 5% of pay.

The 7% deferral exceeds 6%, so it is outside the parameters for an enhanced safe harbor matching formula.

[Lou S.]

Elective deferrals taken into account for purposes of calculating the enhanced match cannot exceed 6% of compensation. In your example above you have 7% of pay deferred gets the employee a match of 5% of pay.

The 7% deferral exceeds 6%, so it is outside the parameters for an enhanced safe harbor matching formula.

Yes and no. I believe the formula he has satisfies ADP but ACP still needs to be tested.