401k Blues

System

Our 401k policy states that the company will pay 35% of the first 3% of deferred compensation and 15% of the second 3% of deferred compensation. Based on an employee who is paid $20,000 per year and wants to contribute 10% what formula would you use for the calculation?

Need help in a flash.

Thanks!!

NaeNae55

You are basically matching 25% of the 1st 6%, but frankly, I am not sure that you want to calculate it that way. I put all my 401k on a spreadsheet (workbook with one sheet for each payroll and several sheets which make up totals). In your case, I would look at my employees and see how many are participating with a contribution of at least 6%. If most or all are contributing 6%, then I would set up my formulas accordingly (those not matching the full amount will need to be noted as different somehow). If not, then you will need to set up extra columns and use IF statements. You can do double checks to make sure your formulas are working. For instance, your employee with $20,000 earnings and 10% match should have a total of $2,000.00 in employee contributions and $300 in employer contributions ($210 and $90). If your formulas are correct, your totals will match these numbers.

You might have a payroll program that will run this for you, but mine can't handle 2% match, so I know it would never handle your situation.

Good luck!