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Former Member
Dec 21, 2007 at 03:39 AM

401K Pre, Post & Catch up - Combined Employer Match

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Is there a way to set up ER contribution rules such that ER contribution limits are applied on the combination of Pre tax, Post tax and catch up contributions?

Problem:

We have 2 savings plans.

1) Regular 401K plan in which employees can contribute pre and post tax

2) 401K Catch up plan in which eligible employees can contribute pre tax (limit $5000)

The employer matches all pre, post and catch up contributions up to first 6% of base salary. The match is based on length of salary.

Employees with 0-2 years get 100% match on their cobtributions ( pre,post and catch up ) up to first 6%, Employees with 3-6 years get 125% match on their cobtributions ( pre,post and catch up ) up to first 6%

Employer contribution limits are set up as ER Contribution rules and are working fine for Regular 401K pre and post tax combinations. However, when the employee has catch up contribution, the system is calculating Employer match separately for Catch up also.

For ex: Employee's base salary: $5000/pay period

Length of service: 1 year

401K pre tax : 4%

401K post tax: 2%,

EE pre tax : $200, EE post tax: $100, ER Match: $300

Now, if the employee also has 401K catch up of 5%,

the system is calculating an ER match of 5% (the rule says ER matches up to 6%) which is $250.

The total ER match has become $300 + $250 = $550 (11%), where as the cap on total match is 6%.

Since 401K regular and 401K catch up are set up as two different plans, the system is applying the limits separately.

Is there a way to configure the plans such a way that the system treats Pre, Post and catch up as a group while applying the ER contribution limits?