Triple Stacked Match

[cpc0506]

We have a client that would like to add a triple stack match for 2016. We are having difficulty with filling out the AA so that it generates language for the SPD which provides flexibility in the way the triple stack match is calculated. We are using a Relius prototype. Does anyone have any suggestions? The language generated in the SPD makes the ACP safe harbor match look as if is a fixed amount. It is our understanding that the triple stack match is fully discretionary within the confines of the compensation limits set for each piece of the match.

If you include the ACP safe harbor provisions in the AA, can you chose to make the triple stack match one year and not the next without having to amend the plan?

[GMK]

My suggestion would be to fill out the AA to do what you want and then write your own description section in the SPD to explain it to Participants.

[i am not a fan of SPD's that are generated by a computer from an AA.]

[cpc0506]

But is the triple stack match totally discretionary from one year to the next without having to amend the plan?

[ETA Consulting LLC]

No, only the last part is discretionary; which is why the overall amount is limited to 4%. After you provide the basic match of 100% on 3 and 50% on next 2, you may provide a fixed match to meet the ACP safe harbor. This fixed amount is not limited (e.g. to 4%) as there is no discretion on whether or not it is made. The 3rd match (the one that is limited to 4%) would be discretionary.

Good Luck!

[Lou S.]

But is the triple stack match totally discretionary from one to one without having to amend the plan?

In case ETA's answer isn't clear

1st match is safe harbor - not discretionary

2nd match is a fixed formula in the document - also not discretionary

3rd match is discretionary, can not be more than 4% of pay and can not match deferrals in excess of 6% of pay.

[BG5150]

Can someone give me an example of this you've used for a client?  I'd like to add this arrow to my quiver when talking about plan design with clients.

[RatherBeGolfing]

It tends to be an "expensive" plan design so it doesn't work for most of my clients. I have never come across a situation where the rank and file employees did not increase deferrals when going from a 3% SH or regular SH match to a tripple stack.  It never falls in the "this is how much you save if participation stays the same" column. The clients who DO use it fall into two categories

1.  The client who is willing to pay a premium to avoid giving something for nothing.  

2. The client who is willing to give more to those who do more for themselves.

I have several clients in both categories and they are well aware that they could be paying less and still max out. the last client I had who switched from a SH Match + integrated PS to triple stack match went from a handful employees deferring to all employees deferring at least 5%.  Sponsor is happy, employees are happy, adviser is happy.  Not my average client but they do exist.