401k - Employee excessively accelerating contributions (deferrals)

[famoosemutt]

Was unable to find an answer to this on the forums or in a google search.

Plan

Plan matches 100% of employee deferrals up to safe harbor match of 3%.

Situation

Employee is accelerating deferrals which lines up to the concern that the employee will be jumping ship and has been slacking. The deferrals are not (likely) sustainable (20% of salary??) so the goal appears to be to max out the employer match. 

ADP contributes 3% of our match to the employee's 401k. 

Query

Will we have to true-up the employee's match if they quit in March/April/May but have contributed their full 3% already? (e.g. employee makes $150k. We have contributed $1.1k by March based upon ADP's approach. Employee has contributed the full $4,500 by March. Do we have to true-up our contribution to match theirs even if they were only a member of the plan for 25% of the year?

[WCC]

8 minutes ago, famoosemutt said:

Will we have to true-up the employee's match if they quit in March/April/May but have contributed their full 3% already? (e.g. employee makes $150k. We have contributed $1.1k by March based upon ADP's approach. Employee has contributed the full $4,500 by March. Do we have to true-up our contribution to match theirs even if they were only a member of the plan for 25% of the year?

This depends on how the document is written. The document will tell you if the match is based on the pay period (no true up) or plan year (true up) or some other method like quarterly, but that is more rare with our clients. If the document says the match is based on the plan year, then yes, you have to true up based on annual compensation and deferrals.

10 minutes ago, famoosemutt said:

Plan matches 100% of employee deferrals up to safe harbor match of 3%.

This statement is not adding up, maybe I am misunderstanding the way you use "safe harbor". But a 3% match does not qualify as a safe harbor match in terms of ADP/ACP safe harbor.