Enhanced safe harbor match rules

We've never had a client enhance the basic safe harbor match beyond 100% of deferrals up to 4%.  We now have a client who prefers to enhance the safe harbor match beyond that instead of adding a discretionary match.  It seems that the rules say deferrals over 6% cannot be matched under any safe harbor match option (and get a pass on ACP).  Is that right?   I think they will want something like 100% up to 3% plus 50% on the next 3%.  The maximum match likely could be 100% up to 6% as an option I believe.   I understand the rules for enhanced are that it must be at least as generous as the basic safe harbor match and the rate cannot increase with an increase in deferrals if it's a tiered match.

Thank you,

Tom

The SHM is based on deferrals up to 6%.  The Basic SHM is 100% match on the first 3% deferred plus 50% match on the next 2%. 

The match rate is not limited to 100%.

The formula of 100% match on the first 3% deferred plus 50% match on the next 3% works.

The client may want to consider alternatives like:

• 200% match on the first 6% deferred.
• 200% match on the first 2% deferred plus 150% on the 2% deferred plus 100% on the next 2% deferred.

While these may not be practical or affordable for many clients, discussing these possibilities can lead a client to have a better understanding of their demographics and matching obligations.

Thanks Paul.  You confirmed an enhanced safe harbor match cannot be based on deferrals over 6% (so as to satisfy ACP safe harbor) and the matching rate can be over 100% but not increase on higher deferral tiers.  This will give them something to think about.  Not sure how practical a higher match rate is but they may cosnider since they want to encourage employee participation and aren't keen on across-the-board profit sharing.