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"Picked-up" contributions not considered a match?


EGB
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I assume that a pick-up contribution in a gov'l plan is not considered a matching contribution, such that a 7-year graded vesting schedule can continue to apply to such contributions on and after 1-1-02(ie, EGTRRA's vesting provisions regarding matching contributions do not apply). (This plan, though gov'l, has applied ERISA's vesting requirements up to this point.) Is this assumption correct?

The plan has a mandatory 5% employee deferral (under 414(h)(2)) and the employer makes a 7% contribution. I see no reason or authority for this being considered a match, but I want to make sure I am not missing something.

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Thats correct. In a governmental pension plan the 7% employer contribution would not be considered a "matching contribution" under the 401(m) regulations.

In order for the employer contributions to be deemed a "match", the participant's 5% contributions would have to be made as "elective deferrals". Employer pickup contributions in a governmental 401(a) plan are not treated as such.

Although the 5% pickup contributions receive favorable tax treatment, they are not considered to be elective deferrals.

earthy in Houston.

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