No match on Roth 401k

[austin3515]

Plan has a pay-period match and for wahtever reason does not want to be bothered with setting it up on payroll the right way to get the match to calculate including Roth.

So they want to NOT match on Roth 401(k). I know, I know, it's ridiculous, but that's what they want to do. Note also that based on who is deferring Roth, benefits rights and features are passed with no problem at all.

Is there any sort of rule that requires Roth and traditional 401k to be treated the same way under the Plan?

From 402A (is this expansive enough to mean that Roth must always be treated just like elective deferrals?)

(a) General rule

If an applicable retirement plan includes a qualified Roth contribution program—

(1) any designated Roth contribution made by an employee pursuant to the program shall be treated as an elective deferral for purposes of this chapter, except that such contribution shall not be excludable from gross income, and

[rcline46]

Make it an indvidually designed plan, submit to the IRS specifically disclosing the separate feature and if they get a letter, its fine. Otherwise the rules in 401(m) only address elective deferrals, and the ROTH diversion is an elective deferral, so they have to match it.

[austin3515]

NEver mind, I just found this on the IRS FAQ Page. Clearly, it is not required.

Can an employer match an employee's designated Roth contributions? Must the employer allocate the matching contributions to a designated Roth account?

Yes, the employer can make matching contributions on designated Roth contributions. However, the employer can only allocate an employee’s designated Roth contributions to designated Roth accounts. The employer must allocate any contributions to match designated Roth contributions into a pre-tax account, just like matching contributions on traditional, pre-tax elective contributions.

http://www.irs.gov/retirement/article/0,,i...2956,00.html#10

[austin3515]

I've just been informed that I'm reading too much into the IRS FAQ. Doesn't necessarily ask the right question, which really is "if they match traditional 401k must they also match Roth 401(k)".

FYI, Sal's book says it's not necessarily required to match Roth if you match traditional 401k.

[Guest jims]

I'm with rcline46 on this. Your current plan is matching deferrals. You can't have a plan with just Roth. If you have Roth you have to have pre-tax deferrals. That may be why you can't find a Q&A on matching just Roth - need to follow 401(m) rules.

[austin3515]

Maybe my question wasn't clear enough, but the client does not want to match roth - they only want to match traditional 401k, and the question is, is that OK? They woudl amend their plan to specifcially state that Roth wouldn't be matched (there have not been any roth deferrals yet).

[Kevin C]

Austin,

Our adoption agreement format VS document has a box to check for "Roth Deferrals are not eligible for any Matching Contributions under the Plan (other than Safe Harbor Matching Contributions)." It's in the Salary Deferral section of the AA, not the section with the match provisions.

[austin3515]

Excellent, thanks for letting me know. Unfortunately, our VS doesn't have it But that seals the deal. FWIW, TAG and EOB both had the same answer, that it is allowable (just not for the SHMAC).

[Kevin C]

You could always amend the VS and submit for a letter. That should easily be a minor enough modification to have it still treated as a VS document.