Match True up when doc says per payroll?

[Jim Chad]

ftwilliams volume submitter - Adoption agreement says match Safe Harbor is per payroll and employer wants us to calculate a true up. Is this legal?

[Bri]

I've seen docs (ASC, not FTW) that provide for an optional true-up at the employer's discretion.  So it may come down to your specific text, as to whether or not the plan would allow it,

(as opposed to it having to fall under the scope of any additional match contribution rules in your document)

[Jim Chad]

Thank you.  I see the option is in this document.

[QDROphile]

Is the "option" to apply a true-up whenever the employer chooses, or is the option just an optional provision that may be adopted in lieu of the payroll-by-payroll provision as a matter of plan design?  I would be skeptical  of the former as impermissible discretion and if the latter, the provision for true-up is not effective unless properly adopted.  The plan administrator has to follow plan terms.  If the plan terms say match payroll-by-payroll without room for reasonable interpretation that the plan means true-up,  then a true-up will disqualify the plan.

[Bird]

It looks like it is totally flexible.  The language below is in the Basic Plan Document.  The concept of contributions being "definitely determinable" lost all meaning some time ago, for better or for worse.

               (b)           Contribution and Allocation of Matching Contributions.  Matching Contributions shall be made to the Plan and promptly allocated to the Matching Contribution Accounts of Participants who meet the requirements of Subsection (a) and in the amount determined pursuant to Subsection (a) as soon as administratively feasible after the end of the periods described in the Adoption Agreement. 

                              (1)           The Company may make an additional Matching Contribution ("true up") on behalf of each Participant in the amount of the positive difference, if any, between the Matching Contributions that would have been allocated to his Account had such contributions been determined on the basis of Compensation for the entire Plan Year and the Matching Contributions previously allocated to such Participant's Account.

[CarolC]

We use the ftwilliam document. Sometimes love the flexibility, sometimes wish it would just tell us what to do. What we've done to solve this particular issue is to have a separate "Administrative Interpretation" document where we spell out whether or not the sponsor chooses to do true-ups on the match.

 

[JackS]

Yes.  It probably should not be but that document was approved and there isn't any other language in the doc that conflicts.  You are following the terms of your plan document when you true it up. 

 

[CJ Allen]

I haven't seen the FT Williams document for some time now, but I thought the Adoption Agreement had a section for "Allocation Times for Matching Contributions" as well as whether a maximum matching limit ($ or %) is applied on a payroll basis or an plan year basis -- may apply only where there's a maximum noted(?!).

Otherwise, if the document is flexible and based upon interpretation, you may want to be sure to review any precedence setting allocations made previously.  If this is the first year, or the employer wants to begin allocating on a plan year basis, the sponsor may want to document the interpretation and communicate it to the TPA in writing so as to be clear for allocation calculation purposes & testing safe harbor match is accurate.

[imchipbrown]

Unless you go payroll by payroll, employee by employee, you can't check a match for accuracy.  I've always put the onus on the employer to take responsibility for methodology.  (FT Williams Prototypes)

[lisam]

I have seen documents that allow discretionary true up on discretionary match, however (unless I am missing something) I think the question was on a safe harbor contributions. My understanding in talking with a few of these providers is that the safe harbor does not have the same discretionary true up capabilities that the discretionary match offers. I believe the IRS indicated in the PPA documents they wanted this feature removed from the safe harbor section as the safe harbor contribution was a mandatory contribution and the true up should be disclosed at the beginning of the year. I would suggest you check this out with FTWilliams, if this is something that has been changed from their EGTRRA to PPA documents they would know best.

[Bird]

On 10/5/2018 at 3:37 PM, lisam said:

I have seen documents that allow discretionary true up on discretionary match, however (unless I am missing something) I think the question was on a safe harbor contributions. My understanding in talking with a few of these providers is that the safe harbor does not have the same discretionary true up capabilities that the discretionary match offers. I believe the IRS indicated in the PPA documents they wanted this feature removed from the safe harbor section as the safe harbor contribution was a mandatory contribution and the true up should be disclosed at the beginning of the year. I would suggest you check this out with FTWilliams, if this is something that has been changed from their EGTRRA to PPA documents they would know best.

Good point.  But I think because of the way the Ft William doc sets up the SH in one section and then uses the Matching section to set up the SH contribution amounts, the optional true up still applies.  I'll leave it to someone else to follow those connections, or as you suggest, just ask them.

FOLKS - for the record, it is Ft. William (no "s").  

[C. B. Zeller]

5 minutes ago, Bird said:

Good point.  But I think because of the way the Ft William doc sets up the SH in one section and then uses the Matching section to set up the SH contribution amounts, the optional true up still applies.  I'll leave it to someone else to follow those connections, or as you suggest, just ask them.

FOLKS - for the record, it is Ft. William (no "s").  

But is it "F. T. William" or "Fort William?" Asking the important questions here.

[RatherBeGolfing]

2 minutes ago, C. B. Zeller said:

But is it "F. T. William" or "Fort William?" Asking the important questions here.

Its both!  One of the first questions I asked them when interviewing new vendors years ago  ?

[RatherBeGolfing]

11 minutes ago, Bird said:

just ask them.

Absolutely.  When in doubt, just ask their documents team.  They know their stuff and they are very fast to respond.