Jump to content

"Picked-up" contributions not considered a match?


Recommended Posts

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.

Link to comment
Share on other sites

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.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...