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"True up" matching contributions under a standard plan


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5 replies to this topic

#1 Kimberly Flett

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Posted 30 November 2001 - 02:09 PM

Does a standard plan 401(k) document require true up match contributions if matching contributions are made per payroll and there is a liability at the end of the year? What specific guidance is available on true up contributions?

#2 R. Butler

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Posted 30 November 2001 - 02:25 PM

You need to review the specific document. It will define compensation for purposes of matching contributions. I have seen some prototypes that provide for matching on payroll basis, but not all have that option.

#3 Kimberly Flett

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Posted 30 November 2001 - 02:30 PM

So are you saying that if the document calls for per pay match that it is not necessary to true up contributions? When would the liability for true up contribtuions even be considered?

#4 R. Butler

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Posted 30 November 2001 - 02:36 PM

I am not following the question? To avoid the true-up the document should define match compensation on a payroll basis (or something to that effect). If match compensation is defined over the entire plan year or the portion in which the employee is a participant (or something to that effect), true-up match must be given.

#5 Kimberly Flett

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Posted 30 November 2001 - 03:16 PM

Ok, so then it does not matter if you are dealing with a standard plan or not, it just depends on the option chosen in the document. (are you the moderator of this board. thanks whoever you are). Are you able to answer the other question I posted today about earnings on match forfeited due to return of excess contributions?

#6 R. Butler

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Posted 30 November 2001 - 03:36 PM

I am not the moderator, that would be LCARUSI, but thanks. In response to your other post, I don't have a cite, but we always allocate earnings to the forfeited match. If nothing else, it seems to be the most sensible approach.