Enhanced Safe Harbor Question....

[shari.sld@gmail.com]

C-corp is changing to a safe harbor plan, due to issues with testing. The goal is to use the enhanced testing method and avoid all testing requirements for ACP/ADP/top heavy .

Is it possible to use the following enhanced match:

Contrib/Match

1%-1%

2%-2%

3%-3%

4%-3.5%

5%-5%

My concern is the "step-up" from the 3.5% match to the 5% match,,,,,,,,

The goal is that employees that contrib 5% continue to receive a 5% match -- does that mean that 4% contrib would need to receive a 4% match?

Thanx,

SD

[BG5150]

You are correct. The match cannot get bigger as the deferral %'s go up.

Why the 1/2% penalty at 4%?