Safe Harbor Weight for 401(k) Plan Contributons

[Christopher Wilson]

Hello everyone - I hope you all and your loved ones are well. Can anyone provide me the IRC section for the 0.5000 safe harbor weighting for contributions?

[Larry Starr]

52 minutes ago, Christopher Wilson said:

Hello everyone - I hope you all and your loved ones are well. Can anyone provide me the IRC section for the 0.5000 safe harbor weighting for contributions?

What exactly are you talking about?   What .5 weighting?  I have no idea what that means.

[shERPA]

I would guess he is talking about a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year.  A reasonable approximation if the contributions come in evenly throughout the year.

But an IRC "safe harbor"?

[Larry Starr]

9 minutes ago, shERPA said:

I would guess he is talking about a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year.  A reasonable approximation if the contributions come in evenly throughout the year.

But an IRC "safe harbor"?

Yeah, but I'm not going to guess. If he gives us an answerable question, I might answer.  I save mindreading for my magic act!

[Christopher Wilson]

I'm speaking of a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year.  A reasonable approximation if the contributions come in evenly throughout the year.

[shERPA]

Is there an echo in here?

[Mike Preston]

3 hours ago, Christopher Wilson said:

Hello everyone - I hope you all and your loved ones are well. Can anyone provide me the IRC section for the 0.5000 safe harbor weighting for contributions?

You might look in the plan document to see if it incorporates language specific to this issue. In the absence of specificity you might nonetheless find language that allows that approach.

[Larry Starr]

2 hours ago, Christopher Wilson said:

I'm speaking of a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year.  A reasonable approximation if the contributions come in evenly throughout the year.

That's a little better; this is what you originally said: Can anyone provide me the IRC section for the 0.5000 safe harbor weighting for contributions?

The real question actually has nothing to do with "safe harbor weighting"; it has to do with the method used in a pooled plan for allocating gains and losses.  

And yes, a standard provision (as used in our pooled plans) is the BOY account balance plus 1/2 of the contributions to be allocated for the year as the ALLOCATION BASE.  And that includes employee deferrals, any non-elective or match contribution, and any profit sharing allocation.  

Now, to answer your implied question: you won't find any IRC section that discusses that, because there isn't any. Your plan document language is what obtains.  Is that what your document says?

[Larry Starr]

1 hour ago, shERPA said:

Is there an echo in here?

NO... No..... no.... no.... no......

[Bird]

15 hours ago, shERPA said:

I would guess he is talking about a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year.  A reasonable approximation if the contributions come in evenly throughout the year.

Bingo, I am impressed!