Can a plan allow a matching contribution that's greater than 100% of t

[Guest SJPrince]

Except for the ACP testing....can a plan allow or provide for a match that is greater than 100% of the deferral?

ex. 150% of the salary deferral is the match, etc.

thanks!

[bzorc]

I believe the answer is yes. I have administered a plan where the match was $3 for every dollar contributed. This set-up allowed a group of doctors the ability to hit the $30,000 annual addition limit in a "creative" fashion. The plan was all HCE's, so ADP/ACP was not an issue.

[actuarysmith]

I don't believe there is any explicit prohibition against using a match formula greater than 100% - we've done it before.

As long as your plan meets all of the applicable tests; ADP/ACP, top-heavy, 404, 415 etc. you should be fine.

[Dave Baker]

Watch your 404 deductibility limit - comes up on you fast if you have a 200% or 300% match.

I had a group of doctors use such a match; a couple of the doctors didn't want to contribute but didn't want to formally waive participation in the 401(k) plan, because they thought maybe one day they'd like to contribute. The other doctors were delighted to have the non-contributors continue to be eligible to participate, because the compensation of the non-contributors counts as part of the 15%-of-aggregate-participant-compensation figure (the 404 limit), thereby giving the contributing doctors more headroom. The professional association was able to get a total of $30,000 into the accounts of the contributing docs (deferrals plus the match) without having to make any profit-sharing contribution (which pleased the non-contributing docs, because they didn't have to have a chunk of their draw put into the plan on their behalf as a profit-sharing contribution either).