401K employer match on dividends

[Al18]

I am getting an employer match (about 15%) on dividends in my 401K. For example, I might see a $400 biannual dividend and the employer is kicking in another $60. Is this typical? I'm too chicken to ask my employer - thinking it's a mistake and they'll correct it by withdrawing the money.

[RockyMtn]

never heard of a match on dividends by an employer. Maybe the employer contributions are kept separate and accrue their own dividends until they fully vest into your account (say at year end)?

[MooreBonds]

Quote:

Originally Posted by Al18 I am getting an employer match (about 15%) on dividends in my 401K. For example, I might see a $400 biannual dividend and the employer is kicking in another $60. Is this typical? I'm too chicken to ask my employer - thinking it's a mistake and they'll correct it by withdrawing the money.

Is your match in company stock? It might be stock the employer has contributed as their matching, and the dividends from those shares are being deposited and called "employer match", because the source of the dividends is from the employer match.

Does this mysterious deposit ALWAYS happen right after bi-annual dividends? Is it ALWAYS the same %?

[Al18]

These dividends are from Fidelity and Pimco mutual funds, and the company match arrives on the same date as the dividends. The company match is called 'safe harbor match'. The 15% matching rate is the typical company match I normally get for 401K contributions. Fidelity is the servicing firm of the 401K, and company policy is everyone is always 100% fully vested.

[RockyMtn]

Didn't realize it was a safe harbor. Reasons for a safe harbor are many. Your answer is here....

http://www.lfg.com/lfg/rfs/docs/doc/...xplanation.pdf

Cheers!

[growing_older]

That's one of the better descriptions of "safe-harbor" that I've seen. But I didn't see any references to making matching contributions on investment gains or fund distributions. I have never heard of any plan that does that and wonder if such a policy (assuming it isn't a mistake) would in fact violate the safe harbor rules by providing match in excess of 6% or match which arguably is discriminatory based on account size which could favor HCE.

[Al18]

RockyMtn, thanks for the link - reading and trying to understand it.

[sengsational]

Quote:

Originally Posted by Al18 I am getting an employer match (about 15%) on dividends in my 401K. For example, I might see a $400 biannual dividend and the employer is kicking in another $60. Is this typical? I'm too chicken to ask my employer - thinking it's a mistake and they'll correct it by withdrawing the money.

The chances of this being a mistake are about as close to zero as you can possibly imagine; there are people at your company and at the fiduciary firm that do nothing but check and re-check those numbers, all day long, every day. Even if it is a mistake, which it's not, they would catch it sooner or later.

[RockyMtn]

Quote:

Originally Posted by growing_older That's one of the better descriptions of "safe-harbor" that I've seen. But I didn't see any references to making matching contributions on investment gains or fund distributions. I have never heard of any plan that does that and wonder if such a policy (assuming it isn't a mistake) would in fact violate the safe harbor rules by providing match in excess of 6% or match which arguably is discriminatory based on account size which could favor HCE.

I assume because there was some form of safe harbor contribution that any distributions related to the shares purchased with that contribution would have to be safe harbor distributions.

I have never seen this as well but we didn't have HCE issues where I worked.

[target2019]

Is it possible that company stock is provided as the match, and then there is additional match provided on dividends which accumulate?

My company provides stock as 4 percent match. That is typical, for me.

[Al18]

The safe harbor match is NOT company stock.
The value of the mutual fund immediately increases by the amount of the dividend+safe harbor match.

[Brett_Cameron]

Quote:

Originally Posted by RockyMtn Didn't realize it was a safe harbor. Reasons for a safe harbor are many. Your answer is here.... http://www.lfg.com/lfg/rfs/docs/doc/...xplanation.pdf Cheers!

That seems to explain some of the changes my former employer made to matching contributions over the years. Thanks!

[target2019]

Quote:

Originally Posted by Al18 The safe harbor match is NOT company stock. The value of the mutual fund immediately increases by the amount of the dividend+safe harbor match.

I was trying to understand the following. Do you get an employer match each week based on your 401(k) contribution? For instance, your employer puts 4% contribution based on your salary into the 401(k) each week provided you put in, say, 8%?

I am reading this thread and simply trying to understand the entire picture.

[Al18]

I also get a safe harbor match on all of my biweekly 401K contributions. This is typical of 401K plans.

I'm just trying to understand why I get a safe harbor match whenever I get a dividend from one of the mutual funds in my 401K. I would be interested to know if anyone else get this in their 401K.

[Rothman]

I may be off here but if the dividends are reinvested maybe this is the company match on the dividend reinvestment?

[Animorph]

Quote:

Originally Posted by Al18 I also get a safe harbor match on all of my biweekly 401K contributions. This is typical of 401K plans. I'm just trying to understand why I get a safe harbor match whenever I get a dividend from one of the mutual funds in my 401K. I would be interested to know if anyone else get this in their 401K.

DW and I have had maybe seven 401k's between us. I don't think I've ever seen record keeping for them that acknowledged dividends, much less collected extra company contributions for them. The fund values just automatically rolled in dividends. Even company stock was in "units" instead of shares, with no explicit dividend reinvestment (although you could tell by the valuation that dividends were being received). We did have at least a few safe harbor plans, but never any interactions due to that.

[ziggy29]

I would just assume that it's reported as an employer match because the dividend is paid out of the shares that were purchased with an employer match?

Dividends of company stock in a 401K can be a different animal. When I worked for Megacorp #1, they gave their match in company stock (60 cents on the dollar on the first 8%), and the dividends from company stock were actually paid out as cash to the account holder, not kept in the plan.