401K company match contributions

I've tried. Really. But I just can't figure out how to set up the company match to our new 401K 'safe harbor' plan.

Our company will match up to 4% of an employee's wages. If the employee selects to withhold 1-3%, we match dollar for dollar. At 4% we match 3.5%, at 5%, we match 4%.

All this I can understand - set up a company match percentage default, and change it for those who do not take the full 5%.

My confusion is where folks have entered a weekly dollar amount to deduct.

It's obvious to me that if the dollar amount equals or exceeds 5% of the workers salary, a straight percentage in company match item will work.

But, for amounts that fall UNDER a full 5% of pay, how do I default the match? What percentage do I enter into the QB company match payroll item?

Must I hand calculate the percentage of salary that the employee's dollar amount represents - and THEN decide what to enter into company match?

How do I ensure that the amount the company contributes does not exceed the amount the employee has contributed? If QB will cap the match to the employee contribution, then I suspect a default of 3% in company match might work.

Any help would be welcome.

Reply to
L
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Request from management that employees should always be required to stipulate a percentage to defer not a fixed dollar amount.

Reply to
Allan Martin

Yah. Shoulda thought of that before the folks from the investment group came by and explained the parameters to all the employees.

Management is unlikely to change it all now, as I just hate extra paperwork.

Reply to
L

Is the employer matching based on a single weeks payroll or should you be looking back to the beginning of the year to determine the YTD percentage? I suspect the calculation may require a whole lot more than you realize.

Reply to
Allan Martin

I believe that violates the IRC.

Reply to
Golden California Girls

Yes, you need a copy of the master plan document. I would be surprised if it wasn't on a per pay period basis, but until you read it and the IRC ...

And as far as QB, it either matches or it doesn't. No partial match. And I don't think there is a way to set up multiple items to do it either.

My suggestion, tell management to get an outside payroll service and let them set up the custom programming needed for that 401(k) that management bought.

Reply to
Golden California Girls

I do not believe that to be the case.

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Reply to
Allan Martin

If it is based on a per pay basis then any employee can opt to not defer for a portion of the year and then withhold a larger amount the balance of the year insuring that they end up with the maximum employer matching. This does not seem right.

Reply to
Allan Martin

I think it would be right. I know of someone (at a Dow 30 company) who signed up for 50%. In the beginning of the year they pull 1/2. Somewhere early in the year he hits the 15K IRS max yearly limit and they stop taking. Why can't a person do this other than at the start of the year?

Reply to
Golden California Girls

You are not following the thread. My concern is the employer matching percentage portion. An employee can manipulate it so the employer ends up matching at the highest rate of 5% even though at the end of the year the employee contributed a lower percentage of his or her total annual salary.

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Reply to
Allan Martin

Guess I'm not seeing the loophole you are, if matching is on a per pay period basis. Each check to the worker is calculated as if it is the only thing, nothing in any before or after period matters, except for the maximum dollar limit the IRS imposes.

Reply to
Golden California Girls

Yes, and there in lies the rub.

Reply to
Allan Martin

Want to set up the equations and use some algebra?

Reply to
Golden California Girls

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