Different Match for Different Classifications of Employees

[Guest RS Vatalaro]

Assume that a plan document states the matching contributions will be granted on a discretionary basis and only to NHCE's. The document is a standardized prototype. Can the plan sponsor specify via Board Resolution that employees with 10 or fewer years of service receive a 25% match while employees with 11 or more years of service will receive a 50% match? Since no HCE's benefit under the match, I believe I have heard this can be done, but want to doublecheck. Any thoughts would be appreciated.

[Dowist]

I don't think this works for 2 reasons.

1. It would take you out of the standardized plan - a standardized plan has to meet the "uniformity" requirements of the 401(a)(4) regulations - essentially this means that everyone has to get the same level of contributions as a percentage of pay (or with matching contributions have access to the same level of contributions).

2. It violates the definitely determinable benefits standard - which is that once a contribution goes into the plan, the plan document (and not a resolution) must state exactly who is entitled to the contribution and how it will be allocated. This standard requires that all aspects of the allocation of contributions be stated within the 4 corners of the plan document.