Match Question

[wsp]

Plan has a discretionary matching contribution feature with no end of year requirement. Company intends to match 100% of first 3% of contributions and fund the match on a payroll by payroll basis. Aside from a PR standpoint is there any notice requirement if they decide to raise or lower that match during the year?

[Guest Genevieve]

Plan has a discretionary matching contribution feature with no end of year requirement. Company intends to match 100% of first 3% of contributions and fund the match on a payroll by payroll basis. Aside from a PR standpoint is there any notice requirement if they decide to raise or lower that match during the year?

Read the plan doc to see if it states how the match shall be funded, i.e. on compensation paid annual, bi-weekly, etc. If it is annually, you will be required to do a true up at end of year to catch everyone they missed in the event they change or stop (and there is a good chance you will have overfunded at the beginning of the year). If they change the formula, you will have to back into the rate and ensure everyone eligible was matched the same. No notice, just caution and probably a true-up if they change. If it states matched per payroll, then you are fine.

[BG5150]

I don't think notice is necessary, but I think it would be prudent. It may upset people if they see less than the stated amount of match in their accounts without. And all it takes is one squeaky wheel to bring down a rain of hurt on a company.

We had one client who didn't notify the participants that profit sharing wasn't going to be made. There was one lady who freaked out and started complaining to the IRS and DOL about all sorts of shenanigans with the plan (none were true). So some agent decides to be a knight in shining armor and long story short, it was hell for the employer to clear itself of any wrong doing.