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re: Dammit - I got an unexpected $3000 check in the mail
Posted on 4/6/14 at 12:14 pm to foshizzle
Posted on 4/6/14 at 12:14 pm to foshizzle
It's somewhat uncommon for a larger and/or public company. You must not have a decent employer match if any at all.
Most make the contributions of one of the "Safe Harbor" contributions so that it eliminates the testing that tripped you up.
If you're courious google Safe Harbor plan design.
The DepArtment of Labor started doing the testing when business owners would put a plan in and not really tell the front line/ low wage employees about it. The owners and higher ups knew about the plan and had ongoing communication about it, but the lower wage/ non- owners were kept out. The testing is done to make sure this practice ended by tying contribution limits of highly compensated and owners to that of the lower wage employees.
With a small contribution to all eligible employees, or slightly larger contribution only to those that participate in the plan, these tests go away and you don't get your money refunded.
If it's a large/profitable company, I'd reach out to HR and let them know its an issue. They will fix it if enough people complain. Especially since its all their highly compensated / more important employees complaining.
Most make the contributions of one of the "Safe Harbor" contributions so that it eliminates the testing that tripped you up.
If you're courious google Safe Harbor plan design.
The DepArtment of Labor started doing the testing when business owners would put a plan in and not really tell the front line/ low wage employees about it. The owners and higher ups knew about the plan and had ongoing communication about it, but the lower wage/ non- owners were kept out. The testing is done to make sure this practice ended by tying contribution limits of highly compensated and owners to that of the lower wage employees.
With a small contribution to all eligible employees, or slightly larger contribution only to those that participate in the plan, these tests go away and you don't get your money refunded.
If it's a large/profitable company, I'd reach out to HR and let them know its an issue. They will fix it if enough people complain. Especially since its all their highly compensated / more important employees complaining.
This post was edited on 4/6/14 at 12:23 pm
3
Posted on 4/6/14 at 12:54 pm to tigers win2
quote:
The DepArtment of Labor started doing the testing when business owners would put a plan in and not really tell the front line/ low wage employees about it. The owners and higher ups knew about the plan and had ongoing communication about it, but the lower wage/ non- owners were kept out. The testing is done to make sure this practice ended by tying contribution limits of highly compensated and owners to that of the lower wage employees.
This answered my question (why this happens). 'Preciate the knowledge.
Posted on 4/6/14 at 1:14 pm to tigers win2
There are other parts of the overall benefit package that are pretty solid but the 401 match isn't one of them.
Posted on 4/8/14 at 1:18 pm to tigers win2
quote:
Especially since its all their highly compensated / more important employees complaining.
Look at the chart above. It is NOT all highly compensated employees. Only those in a small range are affected.
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