Freezing nondiscretionary match & Notice requirements

[alexa]

We intend to freeze the match for 1 of our 401(k) plans. Match is defined in Plan as 50% on first 3% and 25% on next 3%.

It is done each payroll period which is weekly. There is at least 1 union participating in plan. All unions have adopted Management benefits programs.

There is immediate eligibility for 401k deferal at hire and match eligibility is immediate as well. This is not a safe harbor plan.

Question: Is there a notice requirement to freeze match? if so, how many days? Does union have to be notified separately and if so how many days notice?

My guess is that plan had to have been amended prior to beginning of calendar plan year 2008 so we may have to wait until 1/1/2009 to freeze? correct?

[JanetM]

If it is not safe harbor you can change anytime you like by amending the plan. DC plans don't need to provide 204h notice of benefit reductions. You can't reduce benefits already accrued so you have to freeze at future date, before deferral election is made. If employees can change deferrals each pay period then 30 days is plenty of notice. If changes are only allowed at certian intervals, you have to give everyone a change to change deferral and future freeze date will depend on that.

Regarding union, if they just bargained to be in the plan - without stating the actual benefit levels then they are receiving you are fine to set date and freeze. If the bargained the mgt rate of 50% on 3% and 25% on next 3% you will have to wait until the contract comes up for negotiation unless you call them back to the table now.

To recap - notice will depend on plan design. You have to give everyone chance to make change. Examples: If you can only make change monthly you must wait until 5/30 for effective date.