What is a non-elective retirement plan contribution?

A non-elective retirement plan contribution is a contribution placed in an employee’s account by the employer.

  1. This contribution may be placed as a non-elective safe harbor contribution where the employee receives 3% of their gross income in contribution to their 401k account whether or not they choose to contribute to the plan themselves. This is outlined in the plan document and your 401k team would advise of this benefit.
  2. A non-elective contribution can also refer to a profit sharing contribution placed in an employee’s account at the complete discretion of the employer. The amount and instance of these contributions are assessed annually and are not required by the employer.

In both instances, all 401k eligible employees will receive these contributions. The employer cannot be discretionary among eligible employees.

 

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