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Does corporate resolution to make a discretionary contribution create legal obligation to do so?


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Posted

I recall seeing some debate on this in the distant past, but I don't recall any consensus. Say an employer does a corporate resolution to make a discretionary match, or PS, then doesn't make it. Are they now legally required to make it? If not, shouldn't be a plan qualification issue, just revising valuation(s). (And let's assume there's no employment contract that dictates an employer contribution.)

Many employers never end up doing a resolution. If they never did the resolution, then I presume the "failure" to make the contribution isn't a problem anyway?

There may be a potential bankruptcy looming...

Posted

Even without the overlay of how bankruptcy law alters or affects what would result under other law, I have not researched any question like this.

I guess an analysis might consider whether the resolution was communicated to employees.

If there is a meaningful potential for a bankruptcy or insolvency, whoever needs or wants an answer to your first question should lawyer-up.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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