match true-up question

[laineb]

We have a 401(k) plan that provides for matching contributions made on a per-payroll period basis (50% match on up to 6% of eligible comp), with HCEs subject to an $3,000 annual limit on the match.  We have certain HCEs who front-load their deferrals so that they don't get the benefit of the entire $3,000 match for the year. Our TPA suggested that we implement a true-up provision for the HCEs.  It seems like there would be a discrimination issue if we allowed a match to be allocated on a plan year basis only for HCEs. Any thoughts? 

[Lou S.]

If you do a true up it would apply to all similarly situated employees, not just HCEs or you would have a discrimination issue.

But in practice it probably going to go mostly to HCE who front load their deferrals like the ones you describe. That's OK as long as you true up all employee, provided the document allows, even if it only goes to HCEs. If that makes sense.