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Safe Harbor 401(k) Contribution CalculatorBasic Match vs 3% Nonelective

What does this come to under the current IRS rules?

Employer cost per employee of the 100 percent of 3 plus 50 percent of the next 2 safe harbor match against the 3 percent nonelective contribution.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Basic safe harbor match for this employee
$3,200
Employer match at the deferral rate entered
Match as a percent of pay
4.00%
3% nonelective contribution
$2,400
Drawn to one scale
Basic safe harbor match for this employee$3,200
3% nonelective contribution$2,400
Total basic match for the group$32,000
Total nonelective for the group$24,000
All results
MeasureResult
Basic safe harbor match for this employee$3,200
Match as a percent of pay4.00%
3% nonelective contribution$2,400
Cheaper design for this employeeNonelective
Total basic match for the group$32,000
Total nonelective for the group$24,000
How this was worked out
Work shownrecomputed as you type
Match = 100% of deferrals up to 3% of pay + 50% of deferrals from 3% to 5% of pay
Maximum basic match = 4% of pay
Nonelective = 3% of pay for every eligible non-HCE, whether or not they defer

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Match = 100% of deferrals up to 3% of pay + 50% of deferrals from 3% to 5% of pay
  • Maximum basic match = 4% of pay
  • Nonelective = 3% of pay for every eligible non-HCE, whether or not they defer

How it works

A 401(k) plan can skip the ADP test by meeting a safe harbor under section 401(k)(12). One route is the basic match: 100 percent of the first 3 percent of pay deferred plus 50 percent of the next 2 percent. The other is a contribution of at least 3 percent of pay to every eligible non-highly-compensated employee.

The match costs less when many employees defer little. The nonelective costs a flat 3 percent but needs no one to defer. Pay above $360,000 is ignored. Safe harbor contributions must satisfy the vesting and withdrawal restrictions in the statute, and the match design carries an annual written notice requirement under section 401(k)(12)(D) that the nonelective design no longer has. Enter the same pay and rate for a group to see the group total.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Can HCEs get a richer match?

No. The match rate for an HCE at any deferral rate cannot be higher than the rate for a non-HCE.

Can the plan adopt the nonelective mid-year?

Section 401(k)(12)(F) allows a plan to adopt the nonelective design by amendment after the plan year begins, only if the plan did not provide matching contributions for that year. After the 30th day before year end the contribution must be at least 4 percent of pay.

Is there a notice requirement?

Yes. Section 401(k)(12)(D) requires a written notice of rights and obligations a reasonable period before the year for the match design. The SECURE Act removed that notice for the 3 percent nonelective design.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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