Customization Option: Employer Contributions

Employer contributions are IN NO WAY mandatory in 401k Census plans.

Should your company choose to contribute to its employees' 401k accounts, it can do so in any (or all) of three ways:

1. regular matching contributions,
2. discretionary employer contributions, and/or
3. qualified no elective contributions.

The IRS says an employer cannot make total contributions to any employee account that takes the account over the annually-adjusted total allowed contribution amount (don't worry: 401k Census won't let you!). Within that parameter, 401k Census's IRS-approved prototype 401k plan allows employers to choose to contribute to their employees' accounts via...

• Matching Contributions:
  These are defined in terms of participant's elective contribution.
  
  Establish anything from "none" to a straight-line matching contribution (e.g., 50¢ contributed by the employer for each dollar contributed by the plan participant) to a straight-line matching contribution with a maximum (e.g., 50¢ contributed by the employer for each dollar contributed by the plan participant up to an annual per-participant maximum of $2,000); you can alternatively write a schedule of your own and we'll look it over for IRS acceptability.
  
  To view vesting options, click here.
• Discretionary Employer Contributions:
  These are basically profit-sharing contributions, although the employer can choose whether or not to limit them to net profits. Discretionary Employer Contributions can vary from year to year. They are set by the employer. (Once again, "none" is always an option.)
  
  To view vesting options, click here.
• Qualified No elective Contributions (QNECs):
  These are allocated on the basis of compensation or some other variable aside from a participant's elective contribution. QNECs are made to all employees ELIGIBLE to participate in the 401k plan regardless of whether or not the employee actually chooses to participate -- unless the QNEC is being used to satisfy ADP or ACP test corrections.
  
  Establish anything from "none" to a fixed amount per person or a percentage of total compensation. To view vesting options, click here.

Free help is available with understanding your 401k plan customization options and the effects certain choices typically have on a 401k plan. Simply contact us.

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