No Employer Match In 401k When Compensation Exceeds $250k

Submitted by Roth Fan on Wed, 2018-08-08 16:14

I recently came across a plan that stops matching 401k contributions once total annual cash compensation exceeds $250,000. I cannot find any IRS guidance to support this limitation. Would you provide guidance on why an employer would apply such a limitation to a plan?



Submitted by William Tuttle on Wed, 2018-08-08 17:55

  • I do not know for sure, but my guess is; “that which is not prohibited is permitted.”
  • 401k anti-discrimination provisions only prohibit discrimination against Non-Highly Compensated Employees (NHCEs).
  • Therefore, discrimination against HCEs is entirely OK. Some plans do not match any HCEs.

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