Qualified Match vs Regular Match -Correction

[Guest UKH]

The adoption agreement currently reads as a qualified match. The plan has been operated and tested as a qualified match rather than a regular match.

However the company never wanted the match to be 100% vested. They always wanted to follow the vesting schedule. In the past some participants were paid out 100%. However now the company does not wish to pay out somebody 100%.

I guess we could amend the document going forward but can not convert the QMAC into regular match since some people benefited already the full 100% when they were paid out.

What are your thoughts on this issue?

How do you correct this problem as well as the document?

Thank you.

[Guest pineapple]

Based on your facts, the company is stuck with the QMACs already made to the plan. There is no way you could retroactively "correct" the plan to change the QMACs to regular match based on the fact that the plan document provided for the QMAC and the company actually operated the plan in accordance with the QMAC provision. (If the company had never treated the match as QMACs but rather as regular match (i.e., subject to vesting), the company could submit the plan under EPCRS and ask to amend the plan to conform to prior operation (see section 4.06 of EPCRS). However, in your case, the IRS would not allow the plan to be amended retroactively.)

The company can amend the plan for future contributions. Just amend the adoption agreement to provide that future QMACs are discretionary and provide for a regular match.