Discretionary Matching Contribution Question

Good morning everyone, and sorry for all the questions.  Been getting a lot of plans recently that have some interesting quirks/potential issues.

We have a plan that's coming over that's current matching formula is:

"133 1/3% of the first 3% of contributed eligible compensation, plus 100% of the next 3% of contributed eligible compensation"

Question 1) I've never seen a matching formula in excess of 100% of compensation, so I wanted to confirm that this was acceptable.

Question 2) They've asked about increasing the matching formula.  Can they simply do 133 1/3% of 100% of contributed eligible compensation?  Or is there a maximum of 100% of compensation?

Thanks in advance everyone!

For clarity, the formula says 133 1/3% of the first 3% of contributed eligible compensation.  I does not say 133 1/3% of 100% of compensation

It is permissible to have a match rate on elective deferrals where the match rate exceeds 100%. There are plans that go up to a 200% match on deferrals up to 6% of compensation.

If this match formula is intended to be a Safe Harbor Match, then the match must be applied to deferrals that do not exceed 6% of compensation.

The plan sponsor even may think it is too good to be true.

On 3/29/2025 at 6:50 PM, Paul I said:

For clarity, the formula says 133 1/3% of the first 3% of contributed eligible compensation.  I does not say 133 1/3% of 100% of compensation

It is permissible to have a match rate on elective deferrals where the match rate exceeds 100%. There are plans that go up to a 200% match on deferrals up to 6% of compensation.

If this match formula is intended to be a Safe Harbor Match, then the match must be applied to deferrals that do not exceed 6% of compensation.

The plan sponsor even may think it is too good to be true.

This is a discretionary match, not a Safe Harbor (they are doing a 3% Safe Harbor)

Could they contribute 100% of all 401(k) contributions as a discretionary match (or more than 100%).  

Short answer... Yes.

Also note deferrals that exceed 6% of comp can be matched.  There is a lot of flexibility in how to structure a match.  The more creative the formula, the greater need to test for compliance.  If you would like to see what could be called the ultimate match formula, type "triple stack match" in the search box at the top this BL page.

On 3/31/2025 at 9:18 AM, Paul I said:

Short answer... Yes.

Also note deferrals that exceed 6% of comp can be matched.  There is a lot of flexibility in how to structure a match.  The more creative the formula, the greater need to test for compliance.  If you would like to see what could be called the ultimate match formula, type "triple stack match" in the search box at the top this BL page.

That's what I thought.  Are there any concerns if it is only the owner that contributed to the 401(k) that I'm overlooking (assuming all of the employees opted out in writing)?  We are giving a 3% Safe Harbor to everyone regardless, then adding on a discretionary match for the year.