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Benefits Rights & Features Test for Match


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We have a plan that has a discretionary match formula in the document.  This year they did something unusual that I have not seen before and I am trying to figure out if I really need to do a BRF test for it.  The annual match is based on the average weekly deferral contribution of the participant.  Average deferrals of between $1 - $100, annual match is $200; between $101 - $100, annual match is $350; between $200 - $299, annual match is $550; over $300, annual match is $800.   The plan does pass the ACP test but the only employees with the $800 match are the HCEs.  It isn't a lot of money and looking at the percentages of compensation it benefits the NHCEs more but having only the HCEs with the $800 may not look right.  Are the results of the ACP test enough to just move on and not look any further at the way the match was done?

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The match formula is uniformly available to all eligible employees so you don't have a benefits, rights or features current availability test to perform.

You may have an issue regarding the effective availability of the match rate given the unusual shape of the match formula.  I don't REALLY think it is an issue, but there's enough potential that there is an issue that I'd make sure to mention it to the client in writing along with a suggestion that client consult with its legal counsel.

You also may have an issue that the plan document does not specify a definite, predetermined allocation formula for the matching contributions.  IRS enforcement of that requirement is quite lax.  We've discussed it in another thread recently on these boards.  As long as you have an opinion letter on the plan document and the employer hasn't converted the plan to a custom-designed plan, then don't worry much about this issue.

You already are aware of the ACP test's application.

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