401(k) Plan, with fully vested PS provision and no match provision

[msmith]

I am using a Volume Submitter document for a 401(k) Plan. The Plan currently has a discretionary profit sharing provision with a vesting schedule of 100% (full and immediate). The Client would like to restate to add a discretionary match provision. However, they want to use the 2/20 vesting schedule. Does anyone see any problem with restating to add the match and subject it to a different schedule? I know that it could be done if I was preparing a new document and providing both features with different schedules (at the same time).

[austin3515]

No problem at all. Why would there be a law to prevent the employer from providing additional benefits?

There is no requirement that all contributions vest in the same way.

I don't think you intended to "restate", but just to be clear, you could accomplish this through an amendment. Well, I guess provided all the language was in there about ACP testing (maybe there's other sections that need to be amended? Maybe restating wouldn't be such a bad idea after all!)

[msmith]

That was what I thought also and I could find no cite to the contrary. The only reference to something of this nature was from the 1998 ASPA Annual Conference (IRS Q & A's, #59). However, that example was a stand-alone 401(k) and 100% vestng. The plan wanted to add a discretionary match with the 3/20 schedule. The IRS answer was "we believe that technically the plan has a vesting schedule of 100%....."

Also, because of all the additions to the document (definitions, ACP testing, etc.) it is recommended to restate, rather than amend.

[Blinky the 3-eyed Fish]

Restating versus amending is simply a decision on which is easier. It might be very difficult to incorporate all the matching provisions accurately in an amendment. This is one reason that a discretionary matching provision should nearly always be put into a 401(k) document from the onset. The client could simply choose not to use the feature but has it there if they change their mind.