Hi - I'm Dave Bruns, and I run Exceljet with my wife, Lisa. Ive actually been gorging on your articles and videos every night this week. For Tier 2, we can start off in the same way: In this case, though, if the deferral is4% or less, we return 0, since that's already been covered by Tier 1. 2023 ForUsAll Inc. All right reserved. What Are Available Safe Harbor Plan Formulas?, (Often $1 for $1 up to 3.5%). 401(k) Safe Habor Calculations/Formulas | MrExcel Lets run through the benefits and drawbacks of a safe harbor 401(k) really quickly. Safe Harbor The good news is that non-safe harbor 401(k) plan matches are subject to fewer restrictions, including: Employers commonly use matching contributions to meet the following 401(k) goals: However, nonelective contributions may be the superior alternative when trying to meet the following 401(k) goals: While 401(k) matching contributions can be very effective in motivating workers to make salary deferrals themselves, they can also help employers meet various 401(k) goals like passing the ADP test or meeting safe harbor 401(k) requirements at the lowest possible cost. This contribution can be subject to a 2-year cliff vesting schedule. When I copy this down, we'll getthe correct amounts for Tier 1. For example, you could put a new employee on a five-year vesting schedule where the company increases the amount they are vested in by 20% every year. The MATCH function syntax has the following arguments: lookup_valueRequired. But heres the catch: Safe harbor plans require mandatory employer contributions and immediate vesting for employees (that means all employer contributions given to employees belong to the employees the moment those contributions hit their account). 3% non-elective contributions: essentially 3% of gross pay for every eligible employee, regardless of whether theyre putting their own money into the 401(k) plan. To illustrate, your 401(k) plan uses the safe harbor non-elective contribution option and you also want to provide an additional non-elective contribution. Traditional Safe Harbor Plan Match. Estate and Pension Advisory Board (EPAB)(Remote / Cherry Hill NJ), Strategic Relationship Coordinator, Brand Ambassador, Hall Benefits Law (HBL)(Atlanta GA / Hybrid), Jordan & Associates Retirement Services(Remote / Santa Rosa CA), BenefitsLink continues to be the most valuable resource we have at the firm., << Previous news item|Next news item >>, "I need to audit our safe harbor match and need assistance with creating an Excel formula. The notice included a statement that the business may decide to reduce or suspend contributions during the year. 2023 Lampo Licensing, LLC. Any additional compensation contributed as a non-elective contribution may be subject to allocation conditions, such as being employed on the last day of the plan year, and may be subject to vesting, such as a 3-year cliff schedule.