Match Reduces Flex Dollars

[Guest mrjones]

An employer provides flex dollars to its employees; I'm not sure of the specifics, but dollars not used to purchase benefits are received in cash. This year the employer implemented a matching contribution to its 401(k) plan; the odd part is that anybody receiving a match has his flex dollars reduced by an amount equal to the match. I'm still checking, but it's possible that employees who were receiving flex dollars in cash but in amounts less than their match are having the difference taken out of normal compensation. Is any of this permitted? The situation just came to my attention, and I don't have access to my ERISA Outline.

[Kirk Maldonado]

I've not thought this thru, but the arrangement might violate the requirement of Code Section 401(k)(4)(A) provides that no benefit, other than matching contributions, may be conditioned upon an employee elected to make or not to make section 401(k) contributions.

Anybody else care to give us their take on this issue?

[QDROphile]

My take is to disregard stories about apparently bizarre arrangements until full details are provided with some credibility. I take the same position about analyzing or monitoring proposed legislation. It needs to ripen to avoid a waste of time.