We currently have 401k that the company matches up to 6%. Everything was working fine (so we thought) unless an employee had reached the YTD max. At that point, the employer match is no longer matching any money.Being the IT person, I say, it's not matching because there isn't anything to match. They are saying it should continue to match up to 6% of the gross - even if the employee has reached the IRS max.So essentially, we have an employee - let's call them Fred Kruger. He contributes 15% towards 401k - which the company matches at 6%. Now, Fred reached his YTD max amount (which I think is $17500 this year) the last week of November.
For the rest of the year, there is no money taken from his check for 401k AND the employer 6% is no longer 'taken'.The company wants the 6% to continue to come out until the end of the year.Ok - hit me with your thoughts, explanations, or whatever else you'd like. Hi Leslie:The precise configuration of this depends upon all of your companies plan design requirements. Therefore it's difficult to give you a complete answer. In general, continuing the employer contribution after the 402g/403b limit has been met can be accomplished by using 'Non-Matching Options' on the Plan Attributes-Savings Plan Table on the employer Contribution/Match tab (Pct of Special Accumulator).
Ytd Er For Linux Version
Our employees continue to contribute beyond the $17.5K/$23K on an After Tax Basis (not Roth) as does the employer contribution. You should also include your HR Benefits department. Without knowing your 401(k) plan requirements and provisions and how it is set up to operate, you cannot fully know what you need to do. If the deductions are truly supposed to continue, this may be a ‘profit-sharing’ provision that must continue. If it is a misunderstanding by Payroll on the ‘rules’ of your plan, then it should cease.
Regardless, it is not a decision for IT people and maybe not even the CFO. 401(k)s are regulated and must be submitted and approved by the IRS.If you’re looking for ‘typical’ plan provisions, many companies match the first x% of an employee’s contributions up to y%. In this scenario, the ‘no deduction, no match’ comments cited above do apply.Save yourself some legal hassle and get benefits and your legal folks to chime in. The information from the payroll department was actually sent down from the corporate office as far as the matching amount needing to continue after the employee deduction has max'd out. Since we don't have a large population of employees that try to max out that deduction, they are going to go with manually adding in December if needed.(Believe me, I'm the first one to back out of the situation if it should be made at a higher level. I was just being asked why the deduction for the employer match had stopped.).