I'm in the process of setting up a Vanguard 401k for my small business. Right now it's being set up as a non-elective 4% to pass Safe Harbor testing. I can't remember why we did 4% non elective instead of the minimum 3%. Also, is there a benefit to doing the non-elective contribution over the 4% basic match or enhanced match?

The non-elective contribution pros:

1) Easier to calculate (not that the matching is particularly hard per se)
2) Allows you to do cross-testing.  If you don't know what this is, ask your accountant.  If he doesn't know...

Con:
1) Higher cost.  Odds are pretty good that many of your employees won't contribute, but you have to do the ER contribution regardless.  If you did the match there is no ER contribution.

@clivus


Did you get resolve to your answers and questions? Which route did you choose etc? How did it go?
How many employees?

Sorry for too many questions but trying to learn from BTDT types. My thread:
We're setting up a small business 401-k

Non elective 3% is what is required to become a Safe Harbor and not be held to safe harbor testing. I'll follow up by IM. I'm trying to learn