Employer does not want to pay a match on bonus money paid

[Francis]

Does anyone know if there is a way for an employer to not provide matching dollars on any bonus money paid to participants and then deferred into the 401k plan? The plan is a QACA safe harbor with a non-elective contribution but it also has a separate discretionary PS match and the PS match is what the employer would like to avoid for any bonuses. Compensation is now defined to include all W2 money so maybe we can amend the compensation definition and also somehow exclude bonuses from being defeferred into the plan or somehow eliminate matching on any bonus money? Is there a way to do this?

[Kevin C]

Maybe, but I think 1.401(k)-3(e)(1) and 1.401(m)-3(f)(1) prevent you from making the changes during the year.

The compensation definition used for QACA deferrals and the safe harbor contribution must satisfy 414(s). If the plan satisfies 414(s) when bonuses are excluded from the compensation definition, then you can do it. But only if the amendment is in place before the beginning of the year and remains in effect, with no changes, for the entire year. If the change affects the language in the safe harbor notice, you are outside the at least 30 day deemed reasonable period for providing the notice to a calendar year plan. You may still be ok sending it now, but may need to justify that the timing is a reasonable period before the beginning of the plan year.