An employee who earned or received more than $150,000 in 2023 or $155,000 in 2024 or owns more than five percent of the interest in the business, regardless of how much compensation they earn. In some ...

A non-elective contribution is a contribution made by the employer to all eligible employees, regardless of whether they participate in the plan or not. This means everyone in the group receives funds ...

Eligible employees are automatically enrolled in the plan when a new plan is created or a new person joins the company. This is an effective way to help employees to save for retirement and is ...

These are the most flexible plans where employer contributions are at their own discretion and are not required, therefore the plan is subject to annual calculations and discrimination testing. The ...

A safe harbor 401k plan ensures that all eligible plan participants receive an employer contribution. In exchange for making the fixed employer contribution, employers get a “pass” on calculations and ...

The calculation of the entirety of contributions made to the 401k divided by the employee’s total income for the given year.

A calculation that compares average salary deferrals of highly compensated employees (HCE) with that of non-highly compensated employees (NHCE). This is to ensure the plan does not discriminate in ...

A series of tests to review the benefits plans of both highly compensated employees (HCEs) and non-highly compensated employees (NHCEs). This testing ensures that businesses are not being ...

The amount of money that an employer puts into an employee's account. Employers can "match" up to a certain percentage of an employee's contribution to their 401k. Matching varies by plan.

Vesting essentially means ownership. Each employee will become vested, or own, a certain percentage of the employer match portion of their account in the plan each year. An employee who is 100% vested ...