Fixed Match to Discretionary Match

[Guest notapensiongeek]

We (TPA) are taking over the administration of a calendar year 401(k) Profit Sharing Plan that has a fixed match formula of 50% of deferrals up to 4% of pay (per the plan document). Anyone that defers gets the match - there is no last day or hours requirement.

For 2009 we would like to modify the the plan to provide for a discretionary match instead of the fixed match. Are we able to modify this provision as long as we give prospective notice (say, by December 1, 2008 for an effective date of January 1, 2009) or would this be a cutback that would trigger 100% vesting? Or?

Any input would be greatly appreciated.

Thanks!!

[J Simmons]

It won't trigger vesting to make that change.

It would not be a prohibited cutback.

But you need to address the expected EE pushback issue, and have a plan for how to roll out the change to EEs in a way that minimizes that pushback.