Common use of Employer Nonelective Contributions Clause in Contracts

Employer Nonelective Contributions. Instead of making a matching contribution, an Employer may make a nonelective contribution equal to 2% of each Eligible Employee’s Compensation, without regard to whether the Employee was making salary reduction contributions for the applicable calendar year. The Compensation that is taken into account for this 2% nonelective contribution is limited to $200,000, and may be adjusted by the IRS for cost of living increases in accordance with Section 401(a)(17) of the Code. Eligible employees must be notified by the Employer that a 2% nonelective contribution will be made instead of a matching contribution within a reasonable period of time before the Election Period. The Custodian