"Normally, making 401(k) deferrals on a pre-tax basis provides a tax advantage to an employee ... However, in the case of a tipped employee, it may actually create a tax disadvantage, because it converts otherwise tax-free income into taxable income.... Employee education is obviously going to be critical.... [U]nless there is a very generous match, it may be hard to get low-paid tipped workers to see a reason to make contributions that do not produce an immediate tax benefit. Employers may wish to consider making safe harbor nonelective contributions to the plan."  MORE >>