OK to varying matching contribution rates each quarter?

[Guest halka]

A 401k plan has both a small employer match feature and a discretionary nonelective employer contribution component. Plan allocates discretionary contribution equally among all current participants. Plan enrolls new participants quarterly. Assume employer’s matching and discretionary contributions during the 1st two quarters of year equal, say, 90% of its contribution limit, so that only the matching contribution is made during the 2nd two quarters.

(A) Is there a discrimination problem?

(B) Can the employer require that a portion of a discretionary contribution made, say, June 15 be allocated equally in quarters 2, 3, and 4?

Thanks for any help.

[Guest ESOPwizard]

With regard to (A) you may have a qualification issue. If they paln document provides that participants will receive a match, the employer needs to either follow or amend prospectivley the plan document.

With regard to (B) the answer is yes. Remember that the document need to have a definitely determinable allocation formula.