Match Calculation

[Rai401k]

- Plan has a no wait for deferrals

- 2 year wait for the match

- definition of compensation excludes compensation prior to plan entry.

- Match is based on annual.

- The match formula is 33% up to 6%.

Example: Participants Total Compensation was $90k

-Plan Entry Date was 7/1/2012 and Comp from plan entry was $45,000

Deferrals totaled $3,000 for 2012.-----> However deferrals from 7/1/2012 totaled $1,500. My understanding is the total match should be $1,000 however we are being told that is should total $500?

Based on the information above, if a participant entered the match portion of the plan 7/1/2012, is there anyway you can exclude the deferrals prior to 7/1? Is there any way to do this if it's based on annual or would this only work if match was based on payroll.

[Jim Chad]

Does document say to calculate match on a Plan year or pyroll basis? or other?

Do you have an IRS aproval letter? is it legal to have a 2 year wait on match?

[Rai401k]

Does document say to calculate match on a Plan year or pyroll basis? or other?

Do you have an IRS aproval letter? is it legal to have a 2 year wait on match?

The document states that match is to be calculated on plan year.

Yes I have a determination letter on the plan.

Yes it is legal to have a 2 year wait as long as the vesting schedule is immediate.

[MWeddell]

This issue depends entirely on what the plan document says (and how it is interpreted), so I doubt that anyone on the message boards can help you.

[rcline46]

I disagree with both of your answers. Match is 33% of deferrals up to 6% of pay on an annual basis. So 6% of $45,000 is $2,700. I would place the match at $900. (Based on the information above).

Now if the document were to state that the match were on deferrals WHILE ELIGIBLE FOR THE MATCH (emphasis added) then I would agree with the $500 number. However without some qualifier I don't think you can tie the deferrals to the 'while eligible' period.

[Rai401k]

I disagree with both of your answers. Match is 33% of deferrals up to 6% of pay on an annual basis. So 6% of $45,000 is $2,700. I would place the match at $900. (Based on the information above).

Now if the document were to state that the match were on deferrals WHILE ELIGIBLE FOR THE MATCH (emphasis added) then I would agree with the $500 number. However without some qualifier I don't think you can tie the deferrals to the 'while eligible' period.

I'm sorry, i agree with your calculation of $900 as far as the 33% up to 6%.

Unfortunately we can't find anywhere in the plan document where it states specifically that match is on deferral "while on eligible for match". That is why I agree with your answer of it being $900.

I believe if were based payroll instead it would $500

[rcline46]

I agree if the document said the match was per payroll, it would be $500 in your example.

[BG5150]

Have you checked with the people who drafted the document? (The Volume Submitter or attorney)

They might be able to shed some light on the situation.