re: 401(k) discrimination testing

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100 % of the first 4 % contributed.

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Now I'm really confused. I thought the two things that a company could do to start a safe harbor 401k was to either offer 100% dollar for dollar match on the first 4% of each employee's total yearly compensation that the employee chooses to invest themselves or put 3% of each employee's yearly compensation directly into that employee's 401k plan whether or not the employee makes a voluntary contribution themselves, as long as all money in the plan was 100% vested from day one.

It seems that your employer's 4% dollar for dollar matching meets the requirements, as long as it's 100% vested from day one. Why does your company not have a safe harbor plan already?

I might be missing something here.

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to either offer 100% dollar for dollar match on the first 4% of each employee's total yearly compensation that the employee chooses to invest themselves or put 3% of each employee's yearly compensation directly into that employee's 401k plan whether or not the employee makes a voluntary contribution themselves, as long as all money in the plan was 100% vested from day one.

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You got the second safe harbor correct. The first one is dollar for dollar to 3, and 50 cents on the dollar for 4 and 5. I'm not sure if 100 percent to 4 counts.

Also, under either option, employer match must be 100 percent vested from the start. So if you have a vesting schedule, it doesn't matter what percentage you match or contribute - no safe harbor.

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Our company does have a vesting schedule.

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Man, I hate to say this, but have you considered that another company with a more favorable benefits package might be the solution to your problem?

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What's done is done, can't change anything for 2014.

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I think you can still start your own Roth IRA for 2014.

I don't understand how a company doesn't pass non discrimination testing. Is nobody besides the highly compensated employees participating in the plan? Is the plan not following their own vesting and participation rules? If there is a long wait to start participating, the company needs to change their plan policy and just auto enroll everyone at 3% when they are eligible and put it into a low risk default fund. That way you get people to participatte and hopefully avoid the non discrimination testing.

Only three of the main partners participate in our plan for whatever reason. Then as plan administrator, I recommended to start auto enrolling everyone as soon as they become eligible. If some mid level employees left that make a decent amount, we might be in trouble though but that is likely not to ever happen.