Related: I recently was chatting with a retired 401k salesperson who explained to me the real reason for employer-matched contributions. The highest compensated employees, typically executive management, are subject to deferral limits that are based on the contribution rates of the regular employees.

> Why is it important for companies to encourage their employees to save? Aside from “it’s the right thing to do,” there are actually compliance reasons why this is necessary. “It helps with nondiscrimination tests,” says Robert Richter, vice president of SunGard’s wealth & retirement administration business in Jacksonville, Florida. He adds, “Highly compensated employees are subject to deferral limits that are based on non-highly compensated employee contribution rates. If non-highly compensated employees defer at low rates, then it will limit the amount that the highly compensated employees can defer. Safe harbor plans are a way to eliminate that test, but in order to use the safe harbor provisions the employer is required to contribute to the non-highly compensated employees either a minimum matching contribution or an across-the-board contribution, even for those who do not defer.”

- http://fiduciarynews.com/2013/11/are-401k-plan-sponsors-pois...