Pay Period Match vs Annual Match

[Guest Iwonder]

The Plan provides for an annual match.

The match has been made per pay period.

The Plan Administrator refuses to change its match method, maintaining that the Plan document is incorrect.

Is there any way to amend the Plan on a prospective manner without going through VCP??

[QDROphile]

A plan can be amended prospectively by following the amendment procedures of the plan, making sure that no accrued benefits are reduced by the amendment.

The amendment will do nothing to remedy failure of the plan to operate in accordance with its terms prior to the amendment.

One cannot tell from your post if the plan failed to operate in accodance with its terms, but periodic matching contributions are often not in accordance with plan terms if the plan provides for matching on an annual basis.

How can the plan administrator continue the periodic match if the employer does not deliver funds periodically?

[K2retire]

So long as they do a true up at the end of the year they should be fine.

[QDROphile]

How can the PLAN ADMINISTRATOR continue the periodic match if the EMPLOYER does not deliver funds periodically?

The post identifies the plan administrator as the villain who is allocating periodic matches against the terms of the plan document and against the will of all the right thinking players. The plan administraor cannot allocate what the plan administrator does not receive. If the plan says that matches are annual and the employer does not want to contribute periodically (with a true up at year-end) then the employer should contribute only at year end. I suppose the plan administrator could allocate the contribution based on matches calculated per period, but what would the plan administrator do with the part of the contribution that is the true-up?

[DMcGovern]

Are you sure the plan document specifies that the match will be "contributed" annually, or is it calculated based on compensation for the plan year? Generally, when the match is calculated based on the plan year the employer may deposit it more frequently, but must to due the "true up" calculation previously mentioned by K2retire.

I would double-check the wording in your plan document to verify this.

[K2retire]

How can the PLAN ADMINISTRATOR continue the periodic match if the EMPLOYER does not deliver funds periodically?

Probably they are the same.

[Guest Iwonder]

How can the PLAN ADMINISTRATOR continue the periodic match if the EMPLOYER does not deliver funds periodically?

Probably they are the same.

K2retire,

Yes. They are one and the same.

The Employer/P.A. wants to continue a per payroll match and is considering its options:

1) amend the plan at the beginning of the next plan year. Continue a per-payroll match with a true-up at the end of the year.

2)Amend the plan immediately to reflect a per-payroll match butthey are concerned that an amendment now (in the middle of a plan year) would not be advisable. They would make a true-up at the end of the year for this one too.

Which would be better? If neither, what would you suggest?

Thank you for your help.

[Guest Shrek'sconfused]

Dumb question

[Guest Iwonder]

Dumb question

Perhaps, but I was greatly helped by the others. Their kind guidance was appreciated and utilized.

However, in addition to your comment here, I received your insulting personal message. You have altogether too much time on your hands if you have nothing better to do than send insults to a total stranger .