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re: 401(k) discrimination testing
Posted on 3/16/15 at 7:56 pm to Will Cover
Posted on 3/16/15 at 7:56 pm to Will Cover
I would agree. If you can't contribute the amount you want in your 401(k) then take that extra amount and max out a Roth and then invest using a trading account
This post was edited on 3/16/15 at 7:57 pm
Posted on 3/16/15 at 10:53 pm to Will Cover
quote:
100 % of the first 4 % contributed.
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.
Posted on 3/16/15 at 11:28 pm to Will Cover
If you can't even put in enough to get the full match... holy crud your plan is top heavy.
Posted on 3/16/15 at 11:30 pm to TigerstuckinMS
quote:
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.
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.
Posted on 3/17/15 at 5:55 am to LSUFanHouston
Our company does have a vesting schedule. I am 5 years into my company and am fully vested.
Posted on 3/17/15 at 10:57 am to Will Cover
quote:
Our company does have a vesting schedule.
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?
Posted on 3/17/15 at 1:02 pm to Will Cover
quote:
What's done is done, can't change anything for 2014.
I think you can still start your own Roth IRA for 2014.
Posted on 3/17/15 at 2:08 pm to Will Cover
Yep. Max a Roth ira. The benefits of that over a 401k have been listed here plenty times.
Posted on 3/17/15 at 3:29 pm to Fat Bastard
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.
Posted on 3/17/15 at 5:27 pm to Serraneaux
quote:
I don't understand how a company doesn't pass non discrimination testing. Is nobody besides the highly compensated employees participating in the plan?
THat's generally exactly what happens - only the highly compensated employees participate or participate at a much higher level.
quote:
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 by itself probably won't prevent a failure, but it would at least cut down on the amount that it is overfunded.
Posted on 3/18/15 at 5:19 pm to LSUFanHouston
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.
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