Show the Power of the Triple Stack Match

Triple stack match is a 401(k) plan design strategy that can help business owners save more for retirement.

It’s based entirely on deferrals and matching contributions. It uses three individual matches to maximize retirement plan savings. This allows business owners and other key employees to contribute to the plan maximum under Section 415 without nondiscrimination testing. It may be an effective option when the age of key employees doesn’t allow for a cash balance or new comparability plan design.

The Triple Stack

1. Safe harbor match up to 4%
2. Fixed match X% of deferrals up to 6%*
3. Discretionary match 66 2/3% of employee deferral up to 6% (limited to 4%)

Low Participation Scenario

The triple stack match approach is ideal for plans with low participation rates. Let's examine a scenario with two owners and four employees at a company with poor plan participation.

Based on their salaries, both owners can easily exceed annual contribution limits. However, in this particular year, federal guidelines allow the two owners to only count their first $305,000 in annual compensation toward the deferral match.

With the triple stack match approach, the two owners can receive their safe harbor — or basic — match, plus an additional $28,300 each through the discretionary and fixed matches. This approach works in a variety of applications and circumstances — whether it's a small company or a company with more employees.

Good for Your Business

Even if the triple stack match isn’t right for a client, it can be an attention-getting conversation starter. Bringing up the topic with clients can demonstrate your plan design expertise and help you grow your business in other ways.

In fact, your business owner clients may only be hearing about this strategy from you. This can elevate you as more knowledgeable, trustworthy and credible than your competitors.

Talk with a retirement plan consultant from The Standard for more details about the triple stack match and other retirement plan topics.

Key Details

• The plan isn’t affected by employer or employee age.
• Provisions must be in place before the start of the plan year.
• First stack is 100% vested after one year of service. Stacks 2 and 3 can have up to a six-year graded vesting schedule.
• None of the stacked matches can require 1,000 hours of work or employment at year end.
• Every participant must receive the safe harbor notice.

For financial professional use only.