Last Day of Plan Year - Matching Contribution

[abernat]

Hello, looking for some advice or thoughts...

My company had to make some cuts at the end of 2015 due to a lost contract. I was one of those cuts unfortunately.

My company's 401k plan has a 50% match up to 3%. They have a last day of plan employment stipulation. Here is the exact wording from the SPD...

"Allocation Conditions: In order to share in the matching contributions for a Plan Year, you must satisfy the following conditions:

- If you are employed on the last day of the Plan Year, you will share regardless of the amount of service you complete during the Plan Year."

The plan year is Jan 1 - Dec 31. I was employed and worked on December 31st. I worked from 7A-10P. That was my last day of service.

Was I not employed on the last day of the Plan Year? I worked the majority of the day. Should I be entitled to the 3% company match?

Thanks for your advice.

[My 2 cents]

Not a specialist in 401(k) plans or a lawyer, but seems to me that you ought to be. Are they saying you aren't? If so, why? Not as though the plan says that to be entitled to share, you must still be employed at the start of the next year, or even that you must still be employed throughout the entire last day of the Plan Year. Sounds as though you were definitely employed on the last day of the plan year, even if you were not by the end of the day. Working 15 hours on the last day of the Plan Year is not enough?

You would make a claim for sharing and appeal a denial. Then they have to point to the specific plan provision that justifies the denial and/or tell you what you have to do to perfect your claim.

[GMK]

and submit your claim and if necessary, your appeal in writing.

[ESOP Guy]

Are you sure the match formula is mandatory and isn't discretionary?

It isn't uncommon for them to tell employees how they plan on running the discretionary match if they make it but it is still discretionary.. Re-read the SPD and other notices very carefully to see if they hedge if the match will be given with some kind of language that points to the employer having discretion.

It doesn't ever hurt to ask but if you didn't get a match based on the facts given it doesn't sound like it would be a last day of employment issue.

[Griswold]

Just writing to add that you should request the plan documents. The SPD isn't necessarily controlling...

[david rigby]

Based on the facts presented, this is a no-brainer: you met the conditions specified in the plan. If someone is stating otherwise, ask (in writing), and get a written response.

[My 2 cents]

Are you sure the match formula is mandatory and isn't discretionary?

It isn't uncommon for them to tell employees how they plan on running the discretionary match if they make it but it is still discretionary.. Re-read the SPD and other notices very carefully to see if they hedge if the match will be given with some kind of language that points to the employer having discretion.

It doesn't ever hurt to ask but if you didn't get a match based on the facts given it doesn't sound like it would be a last day of employment issue.

If it is discretionary, the result should be that the original poster gets exactly the same match as everyone else. If the original poster is not getting a match, then nobody should. If others are getting a match, it is owed to the original poster. Simple.

And if the plan and SPD differ materially on this point, that by itself is a serious problem that will have to be fixed. In some jurisdictions, the sponsor is bound by the language in the SPD.