Is an SMM required

[cpc0506]

Client changes the match calucation by removing the true-up option for calculating match.

Nowhere in the SPD is true-up mentioned. Is an SMM required?

[masteff]

29 USC § 1022 (ERISA 102) says in part "A summary of any material modification in the terms of the plan and any change in the information required under subsection (b) of this section shall be written in a manner calculated to be understood by the average plan participant and shall be furnished in accordance with section 1024 (b)(1) of this title."

You made a change in the terms of the plan. So then the question is whether it's a material modification; arguably, elimination of true-up is material.

[PensionPro]

An SMM is only required I believe if it is modifying info in the SPD. Arguably if info is material it would be on the SPD. However, communicating the change to the participant is important so you do not get questions later on about why there is no true-up this year.

[BG5150]

What did the SPD used to say about the match exactly?

[cpc0506]

Here is the language from the SPD:

What is the Employer matching contribution?

A matching contribution is a contribution the Employer makes based on your elective deferrals. If you do not make any elective deferrals, you will not receive any matching contributions.

The Employer may make a discretionary matching contribution equal to a uniform percentage or dollar amount of your elective deferrals. If the Employer decides in any year to contribute a discretionary match, it will decide how much to contribute and the matching rate which will apply to your elective deferrals.

If you make elective deferrals, you will always share in the Employer's matching contribution for that Plan year, regardless of the amount of service you complete during the Plan year.

No where does it mention how the match is calculated. We use Relius for our documents.

[BG5150]

1) In that case, I don't think an SMM is necessary.

2) I'd ask Relius; couldn't hurt.

3) As PensionPro said, you may still want to convey this to the participants.

[John Feldt ERPA CPC QPA]

If you change the document selection in the Relius document so the match is calculated something like a per payroll calculation, and then re-run the document in the system to generate a new SPD, I think you will find that the new SPD now states that the match is calculated on a per payroll basis.

I would hand out an SMM at least, and perhaps generate a new SPD for new enrollees.

[K2retire]

If I remember correctly, the Relius document gives you a choice of match "per payroll period, no true up" or "annual". If you choose the per payroll period option, the following sentence appears in the SPD: "The Administrator will determine the amount of the matching contribution made to the Plan on your behalf for each payroll period."

[cpc0506]

That language is not showing up on our SPD....

[masteff]

While I don't know an example offhand of what might be material in the plan that's not also in the SPD, it is incorrect to say an SMM is only needed if the SPD changes.

If I can't convince you with the code I cited above, perhaps the DOL and US Senate will persude you...

The DOL website says: "The Summary of Material Modification (SMM) apprises participants and beneficiaries of changes to the plan or to the information required to be in the SPD." http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html

This Congressional Research Service document on page 8 says: "Under Section 104(b)(1), a plan administrator must provide a summary of any material modification (SMM) in the terms of the plan as well as any change in information required to be included in the SPD." http://www.aging.senate.gov/crs/pension7.pdf

[cpc0506]

After much discussion, we decided to generate an SMM for the client.

Thanks all.

[QDROphile]

Let's not lose the big picture here. Disclosing a payroll period match without a true up IS A BIG DEAL. How many times have I received a call from an HR manager who had a footprint on his or her buttocks from a kick from a BSD executive who figured out that he or she did not get the maximum match despite a maiximum deferral under the plan? If the disclosure is not in the SPD (and the election form and every other communication about the match) someone will get shortchanged and will be justifiably angry and possibly will have a legitimate claim. So don't even talk about the deadline for publisheing the SPD or SMM. Get out there and disclose OR do the right thing and reinstate the true-up.

By the way, you should check carefully to make sure you don't have a document problem. A pay period match without a true up has to be very carefully worded in the plan document.

[401king]

Assuming this is a mid-year change, what is the effect on people who already made their full 2013 contributions under the assumption that there would be a true-up?

[cpc0506]

The amendment is effective 1/1/14 so mid-year amendment change is not an issue.

[ForksnKnives]

IMO definitely a change that would be material to an employee, especially a HCE likely to be affected. I would consider it CYA to issue the SMM (along with an email or letter) to protect myself from an angry executive.