403(b) wants to match retroactively

[Lori H]

a 403(b) that is terminating and shutting down the company later this year, suspended its match mid plan year 2009. they are now wanting to go back and match those accounts as well as match for 2010 plan year. when the plan was amended the match became discretionary. they have not filed their 2009 tax return or 5500. how much trouble could they get in for giving money to their participants?

[mbozek]

a 403(b) that is terminating and shutting down the company later this year, suspended its match mid plan year 2009. they are now wanting to go back and match those accounts as well as match for 2010 plan year. when the plan was amended the match became discretionary. they have not filed their 2009 tax return or 5500. how much trouble could they get in for giving money to their participants?

The employer could certainly make contributions for 2010 for all employees making less than 110k up to the lesser of 100% of comp or 49k and non discriminatory contributions for those employees with comp over 110k. Employer contributions could be the equivalent of the match for both 2009 and 2010. Certain severance payments may also be included as comp. The NP needs to discuss this Q with counsel/tax advisor.

[30Rock]

Is there a problem for contributing for 2009? If this is a calendar year plan, the 990 deadline is May 15, and the 415 deadline is not until October 15th.

[TLGeer]

Is there a problem for contributing for 2009? If this is a calendar year plan, the 990 deadline is May 15, and the 415 deadline is not until October 15th.

And the time restriction for making the match under ACP testing is 12 months. Regs. 1.401(m)-2(a)(4)(iii).

The terms "suspend" is unclear. Was the plan document amended? If so, what did it say before and what does it say now? Discretionary? Tiered? Cap on compensation to be matched? Did they just stop making matching contributions? If matching contributions were discretionary and they just stopped, what s the plan document's language as to the calculation period for a match? In particular, if there were matching contributions for part of the year, did the document require a true-up at year-end?

Based on the answers to these sorts of questions, additional issues may or may not exist.