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Compensation negotiations / 401k

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vestie

Junior Member
What is the name of your state (only U.S. law)? MO

I am in the process of preparing a compensation increase negotiation proposal with my employer. I am trying to be creative as employer has aversion to simple salary increases that increase base salary with respect to future calculations.

We have a 401k plan I must assume is a Traditional 401k as there are no mandatory employer contributions. My employer's rule is simple...match what he wants if there are funds available, no match if not. We've had no match since 2008. Small business with approx 40 employees.

I would like to ask for a guaranteed match of either a % of pre-tax $ or a fixed dollar amount. But, I do not know if that would violate 401k non-discrimination rules. Although I do not know for sure, I do not believe any employee would classify as an Highly Compensated Employee save the owner himself.

Could my employer contribute to my 401k a significantly higher amount / any amount to my 401k but not to other employees without failing non-discrimination testing?

Thank you for any responses. Vestie
 


cbg

I'm a Northern Girl
No. Not only No, but Hell, No.

401k's are heavily regulated by the Feds. They cannot treat any single employee differently than the others, or vary their treatment of all employees in the slightest from the plan document rules, or they risk not only failing discrimination testing, but having the plan shut down completely by the IRS.

And no, I am not exaggerating even a little.
 

Beth3

Senior Member
I would like to ask for a guaranteed match of either a % of pre-tax $ or a fixed dollar amount. But, I do not know if that would violate 401k non-discrimination rules. Although I do not know for sure, I do not believe any employee would classify as an Highly Compensated Employee save the owner himself.

No******************************************....! This would violate the rules of the Plan Document and federal ERISA regulatioins. They CANNOT just do this for you.

FYI, for purposes of discrimination testing for the 401(k) Plan, if you rank all employees top to bottom on the basis of their compensation, the top 10% are considered "highly compensated." So if the owner makes $100,000 and the next nine employees make $6.50 an hour, those are all "highly compensated" employees (assuming there are 100 employees.)
 
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