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Discretionary match options


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Reposted to correct 401(k) message board. Haven't posted in forever and didn't watch what I was doing

Client would like to have one match formula for executives & office staff and a second match formula for warehouse staff. We are told that the match for the warehouse staff will be a better formula than the formula for executives & office staff (which is where we are told HCEs are). We don't have the breakdown by group yet.

We were told that if we did this in the FT William document, we were to use the discretionary match of D.6.a "A discretionary amount and percentage of Matched Employee Contributions". The Note in document states "The discretionary formula in D.6a must meet the nondiscrimination requirements regarding benefits, right or features described in Treas. Reg. section 1.401(a)(4)-4..

While I understand that if you have different match formulas for different groups of people, you must do BRF testing, I'm not convinced that it is o.k. to use a discretionary match option in the document, Using that option should mean having one discretionary formula for everyone in the plan, shouldn't it?

And, I understand that while the client is telling us that the match formula for the warehouse staff will be better than the executives & office staff, we wouldn't know that until we actually saw what formulas they are thinking of using. And who knows what they would think up for the match formulas for future years.

Anyone else run into a formula like this or have any idea if it will fit into the FT William document?

I'm not looking forward to allowing this at all as the BRF will be something that we have to calculate manually as the testing software doesn't do that test.

Any thoughts?

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