If the Employer Never Makes Matching Contributions then take them out of the Document

[KateSmithPA]

When I was at the ASPPA Conference last October, I attended a session on Plan Documents. I wrote a note during the session that said if there is a feature in the plan that is not being used and probably will never be used, then don't put it into the plan on restatement. For example, a discretionary match that never happens.

I know the reason to do this made sense to me as I sat in the session, but I cannot for the life of me remember why it was important to remove unused features.

Can anyone out there tell me why it would matter?

Thank you.

[Tom Poje]

Not off the top of my head can I think of a reason. If it was a new plan, I imagine the reason for not including the match is that you could add it at a later date and still get the 3% ACP look back becasue it would be a new feature.

[John Feldt ERPA CPC QPA]

Exactly. If they are not using it now, and their testing is prior year, then the prior year match is 0%. So when they decide in some year to actually contribute a match, passing ACP can become a problem, especially if they do not want to switch to current year testing for some reason.

Or if the year has ended already, and they say "Hey, let's make a discretionary match for last year, our document allows that." At that point it is too late to amend to use current year testing.

[Sully]

Can anyone out there tell me why it would matter?

I have had plan sponsors that were concerned the discretionary match language in the SPD might mislead the participants into thinking they were going to get a match.