No Match on Catch Up with Separate Elections

[401kology]

The plan document states that catch-up contributions are not matched. In operation, the client uses a separate election for catch up contributions (regardless of the mandatory Roth catch up rules). The match is per pay period and there is no true up. No limit on deferrals.

My understanding is that a catch up contribution is not a "catch-up" until it exceeds a plan or statutory limit. The issue is that the plan's payroll provider has not been matching on any contributions that are in the elected catch up bucket. As an extreme example, let's consider 2 participants both over 50:

Participant 1 elects only catch up deferrals and has $0 in the regular catch up election. Participant 2 elects only regular deferrals and $0 in the catch up election. Both employees defer a total of $7,500. Part. 1 gets no match and Part. 2 gets the full match.

IMHO - I think they both are owed the match because no plan or statutory limit has been exceeded. Wanted to see if anyone else had run into this situation, especially now that separate elections are an option for handling the mandatory Roth catch-ups.

p.s. I have also considered that this impacts more than just the match allocation, because the $7,500 in deferrals should be included in the ADP test for participant 1, not to mention the 415 limits. Thoughts?

[WCC]

I agree with you. The separate election is just a cosmetic box used for "convenience". I am not a fan, but I know some sponsors have their reason why they think it is advantageous. I have seen this many times and those dollars should be matched. I have seen one or two documents written in a way that says "...we don't match contributions made under the separate catch-up election box". If your plan just says "we don't match catch-up", then those dollars should be matched. 

[401kology]

Thanks @WCC - I agree that if the intent is not to match separately elected catch up, then the document should state that but just the standard "catch up contributions are not matched" provision, my opinion is that you must follow the term in regulations and catch ups are defined as deferrals that exceed either an plan or statutory limit (not verbatim obviously).