McKay Hochman - Commentary

Commentary

Safe Harbor 401(k)/QACA Comparison Chart

September 12, 2007

Safe Harbor 401(k)/QACA Comparison Chart September 12, 2007
	Safe Harbor 401(k)	QACA
Safe Harbor NEC	3%	3%
Safe Harbor (SH) Matching Example	$/$ 0 — 3% ½$/$ 3% — 5% 3% deferral 3% SH match	$/$ 0 — 1% ½$/$ 1% — 6% 3% deferral 2% SH match
Maximum Required SH Match	4% of Compensation	3.5% of Compensation
Vesting	100% Immediate	100% after 2 years (e.g. 2-year cliff vesting)
Automatic Enrollment	Optional	Required initially at 3%, with annual increases (to 4%, 5%, 6% respectively)
Top Heavy Rules	Top-heavy rules apply. May be exempt if only deferrals and SH contribution is made (annual determination).	Top-heavy rules apply. May be exempt if only deferrals and SH contribution is made (annual determination).
SH Notice	Required	Required
Automatic Enrollment Notice	Only needed if plan utilizes automatic enrollment.	Required
QDIA Notice	Only needed if plan utilizes QDIA.	Only needed if plan utilizes QDIA. Most QACA are expected to use QDIA.