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Matching Contributions in Money Purchase Plan based on deferrals to 457(b)

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I am familiar with governmental plans using a PSP for matching employer contributions based on deferrals to a 457(b), however, this is my first time seeing it done with a MPP.

The money purchase plan has a fixed employer contribution 10% of earnings (no mandatory participant contributions) for the City Manager and ALL OTHER employees receive a variable employer match up to 5% of earnings based on their contribution to a 457(b).

How is such a contribution formula fixed or definitely determinable?

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What do you mean by a variable employer match? If the match varies only with the size of the employee contributions, that is considered definitely determinable, because the benefit is not subject to employer discretion. However, if the employer can decide each year whether to make a match, or at what level the match will be, then this would not be appropriate for a NPP.

The focus of the definitely determinable benefit rule is avoiding employer discretion over the amount of the benefit. Thus, either the benefit must be stated in the plan (defined benefit plan), or the employer contributions must be stated in the plan and earnings must be credited at actual plan earnings rates. The definitely determinable benefits rule does not preclude employee discretion affecting the amount of the benefit. After all, voluntary employee contributions always increase the size of the benefit. So long as the amount of the employer match is affected only by employee discretion as to the size of contributions, not employer discretion over the amount of the match, the plan satisfies the definitely determinable benefits rule.

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