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Patton Wealth Management, Inc.

Form CRS
  Reports

Patton and Paychex

Patton Wealth Advisors and Paychex, along with an additional third party firm providing 3(16) administrative fiduciary services, provide a turnkey 401(k) solution. The combination of our three firms provide you with a turnkey 401(k) plan solution.

New Plan Considerations

Eligibility (when is an employee eligible to participate in your plan)

  • Age: 18 to 21. Most opt for 18.
  • Work Requirement: 0 - 12 months. 0 months means that every new hire is immediately eligible to participate in the plan. This can be attractive to employees. The primary consideration for employers is if you experience high turnover in the early months of employment AND if you provide a match that vests immediately (see below “Matching” and “Vesting Schedule”) as these short-term employees would receive and keep this match. Most opt for 0 - 6 months.

Matching Employer Contributions (money the employer puts in the plan on behalf of its employees)

Discretionary Match

This can start or stop at anytime at the discretion of the employer (should be communicated to employees). There is flexibility in the design.

  • Common Example: 50% of the first 6%. This means that the employer will contribute 50% of an employees first 6% of their contribution. Therefore, if an employee contributes 6%, the employer will contribute 3% (if an employee contributes 2%, the employer will contribute 1% and so on). The maximum an employer will contribute is 3%. This matching example is only one of many designs.
  • This match will limit the contributions allowed by owners and highly compensated employees. This match can be changed or stoped at anytime.

Non-Discretionary Match / Safe Harbor Match

This match can only be stopped annually with advanced notice. It is limited in its design. The benefit of this match is that company owners and highly compensated employees may be able to contribute more to the plan.

Matching Types
  • Basic Match: 100% of the first 3% and 50% of the next 2%. Requires the employee at to contribute to their account.
  • Enhanced Match: Typical formula is a 100% match on the first 4% of deferred compensation.
  • Nonelective Contribution: 3% (or more) of compensation for all employees. This doesn't require the employee to contribute to their own account.
  • Owners and highly compensated employees have less limitations on their contribution amounts.

Vesting Schedule: determines how much of the EMPLOYER's matching contribution an employee keeps upon termination.

  • Common Vesting Schedule for discretionary matching
    • 0% if employed < 2 years
    • 20% if employed 2 - 3 years
    • 40% if employed 3 - 4 years
    • 60% if employed 4 - 5 years
    • 80% if employed 5 - 6 years
    • 100% if employed 6 years or longer
  • Vesting schedule for non-discretionary match / safe harbor match
    • 100% immediately

Auto Enrollment: all eligible employees will be automatically enrolled in the plan unless they proactively opt-out. They can opt-out at anytime. The default deferral rate is 3%.