Timing of minutes reflecting the amount of a discretionary match.

[KJohnson]

A plan has a discretionary match based on "a percentage of a participant's deferral contributions." The plan has a last day of the plan year employment requirement for the match.

The employer decides to match 50% of all deferrals. Is there any reason that the minutes have to be in place by the end of the year? Since you are "following" the discretionary formula I don't see any "cut-back" issues (like there might be if you tried to impose a "cap" if one did not exist in the document) if you decide on the match sometime in January or February. I have a TPA insisting that the minutes must be in place by 12/31.

On a related issue I am now seeing documents where the discretionary match is based a percentage of the participant's deferrals, but the document specifically provides that the employer also has the right to a discretionary "cap." This is a major protype provider. I guess the IRS saw no "definitely determinable" issue here? I noted some prior discussion on this board stating that you could not have discretion in both the matching percentage and the cap because of definitely determinable concerns.

[four01kman]

Being an "old" practitioner, sometimes I remember things that might not be true today. It used to be that in order to "fix" the amount of the employer contribution, a board resolution had to be adopted before the end of the fiscal year, and the amount of the contribution or the manner of the allocation had to be communicated to the employees before the end of the year. It is my guess that is why the tpa is asking.

I'm not sure if the accrual resolution is still required, since contributions made before the tax filing date are deductible in the year to which they refer.