Employer Match - What does this mean?

[Guest tgraham]

401(k) plan, not a safe harbor. In the plan document, under Matching Contributions, the box is checked that reads: "Such amount, if any, equal to that percentage of each Contributing Participant's Elective Deferrals which the Employer, in it's sole discretion, determines from year to year." Am I correct in interpreting that to say if the employer tells the participants that they have a 6% match that, a participant who earns $126,000 and defers $12,000 should get an employer match contribution of $7560?

Thank you for your help.

[Mike Preston]

There is nothing in that language that talks about a maximum. It is addressing the percentage match (typically 50% or 100%). I think you would need to look elsewhere to see the maximum.

[Guest tgraham]

Mike,

Thanks for your reply. I'm not sure what you mean by a maximum? The plan document does not state what the employer match % is. It is to be determined every year. For 2003, the employer stated the match was 6%. The only box that is checked under Part C. Matching Contributions is the one referred to above. Thanks.

[Mike Preston]

The way I read the section you cited, the words themselves talk about what percentage of each participant's elective deferrals will be matched, they don't say anything about what percentage of each participant's compensation will be matched.