Match True Up

[Guest Mikk]

Plan calls for a safe harbor matching contribution determined and contributed on a payroll period basis. Client wants to do a true up after the end of the plan year. Can we true up or is that prohibited because of payroll period match determination?

[rcline46]

No true up, that violates the document. Have match on annual basis, and there is no problem if it is calculated and contributed per payroll (no restrictions on who gets match!). THen you can do a true up.

Or don't let anyone 'prefund' deferrals, they must be prorated over all pay periods for the year.

[RCK]

Or you can amend to allow a trueup.

[Guest Sieve]

I question whether an amendment to change the SH match from payroll based to true-up in mid-year violates the SH 12-month plan year rule (which specifically does not permit amendments during the year). (Treas. Reg. Section 1.401(k)-3(e)(1): " . . . a plan which includes provisions which satisfy [safe harbor requirements] will not satisfy [coverage and non-disrimination requirements] if it is amended to change such [safe harbor] provisions during the plan year.")

[K2retire]

I agree that such an amendment would need to be effective with the next plan year, not mid-year.