discretionary match - notice to participants required if discontinue making match?

[PensionNewbee]

I have a client who makes its matching contribution quarterly. They haven't had a good 4th quarter and want to not make a 4th quarter match. The match is discretionary, but they feel obligated to notify participants that no match will be made. Is there any sample language out there?

Thanks!

[WDIK]

Even though the match is made quarterly, isn't the "discretionary" amount determined on an annual basis?

[PensionNewbee]

as I said, it's totally discretionary, and made quarterly. I think it is determined quarterly as well.

Any sample language you can think of?

[Blinky the 3-eyed Fish]

How about this?

Our company is struggling financially and we are unable to continue to make a matching contribution as we need to use the funds to pay our creditors. By the way, I need to see all those hired in the last year in my office as soon as possible.

CEO

[QDROphile]

And how about this general notice?

We have designed our 401(k) plan to provide extra compensation for those employees who are able to save. This is America after all. The more you have, the more you get. We understand that some of our employees may have serious financial obligations, such as caring for children aged parents, and that they may be working just as hard and contributing just as much to the success of the Company as anyone else, but too bad if they can't save part of their pay in order to get the match.

Some people might say that the Company is offering the match to encourage savings. America has a bad savings rate and many peoplea re headed for retirement income crisis. But this Company obviously is not trying to encourage or reward those who may choose to stretch for some savings because the savings incentive offered by the Company is an illusion, as shown by the Company's decision not to match this quarter. So how much are you going to stretch your budget to work in some savings now that you know you have no assurance of the apparent reward of the match? We hope that your retirement savings rate is unaffected by the match. Please don't think that the Company is either so paranoid, insensitive or ill advised as to create an apparent incentive that the Company is not committed to live up to. Next year, we are going to give you regular pay on the same basis. We sort of think we will pay you a specified amount, but if we have a rough time we may have to cut back a bit. We are sure you will understand.

[PensionNewbee]

thanks for your "help" people. I'm still grinning.

At the risk of adding more fodder to the fire, here's what I wrote:

Although the Plan was established with the intention and expectation that contributions would be made indefinitely, nevertheless, the Board of Directors has determined that the Employer Match will be suspended as of October 1, 2003. It is our hope that this suspension is temporary, however, (Client Name) reserves the right to make the suspension permanent.

[Guest halka]

Enjoyed the levity (?) but it raised a question that I'm sure has been researched. Here 'tis: Assume company has made a 50% matching contribution for several years, but totally eliminates the match. In an ideal world, the participants would increase their deferral rates so they still achieve their retirement goals. However, I suspect the opposite actually occurs - participants figure "if I'm not getting that immediate gratification/employer contribution, the hell with it" and deferrals decline. Can anyone identify online surveys that have studied actual situations?

THANKS