Discretionary Match

[Young Curmudgeon]

Assumptions: This is a 401(k) plan in which no owner or HCE participates.

The sponsor will make a discretionary match which they will contribute on a payroll basis. They want to be able to vary the amount of the match throughout the year without "truing up" at year end. For example, January's match might be dollar for dollar while February's match might only be 50 cents on the dollar.

Our document would seem to allow this, but compliance opinions are in disagreement on whether this is allowed without the true up to a consistent formula at year end.

Any thoughts? Citations would be appreciated.

[QDROphile]

With discretionary match, the big picture can be overlooked. The problem can be identified by reference to Gray's Anatomy, which will definitely show where the cranium should be relative to the rectum. Unfortunately, repositioning is only the first step toward an understanding that one should never even get to the question let alone to the point of requesting a citation for disposition of the question.Treas. Reg. section 1.401-(b)(1(ii) should be considered.

[John Feldt ERPA CPC QPA]

I that reference is Treasury Regulation 1.401-1(b)(1)(ii)

"... The plan must provide a definite predetermined formula for allocating the contributions made to the plan..."