Tiered match

[R. Butler]

Plan Sponsor wants to tier their match whereby the match rate increases as deferrals increase. We have recommended against that, but they are still considering.

I know that the issue is whether the match is effectively available at all rates of deferral. I know that it is a facts & circumstances test and there is not a safe harbor percentage whereby plan sponsor can be assured that the effective availablity is met. Having said that is there a percentage of the NCHE's (less than a 100% of course) whereby the plan sponsor can at least feel a little comfortable that the they have met effecitve availabity?

Thanks for any guidance.

[GMK]

I'd stay away from this idea, but maybe it's OK for deferral rates in the 0% to 3% range.

You could also probably justify it if, for each match rate, the percentage of NHCE's receiving that match rate is comparable to the percentage of HCE's receiving the same match rate. So, 10% of NHCE's get the 200% match, and 10% of the HCE's get the 200% match; 30% of NHCE's get 150% match as do 30% of HCE's, etc. Like that's gonna happen.