May a “notice” about discretionary matching contributions be in the summary plan description?

In a package of documents accompanying an adoption agreement to use a set of IRS-preapproved documents, a service provider furnished a “Discretionary Matching Contribution Notice” with this description: “This form describes the formula used if any discretionary matching contributions are made to the plan. This notice must be provided to each participant who received a discretionary matching contribution no later than 60 days following the date the last contribution is made to the plan for the plan year.”

The plan’s sponsor/administrator does not use the service provider’s assembled summary plan description. Also, it does not use a summary of material modifications.

Instead, we write and deliver an updated summary plan description before each year, and more often than yearly if there is a change.

Rather than a distinct “notice”, the plan’s sponsor/administrator would prefer to include the content about discretionary matching contributions in the SPD (and omit anything separate).

Does anything about reliance on the IRS’s opinion letter preclude delivering the information that way?

Does anything about in a basic plan document preclude delivering the information that way?

Is there another reason it would be unwise to deliver the information that way?

Leaving aside the IRS for a moment ... another consideration might be what the Ninth Circuit recently opined about SPD provisions:

"Assuming that Platt only received the 2022 email containing the new SPD, this email did not provide sufficient notice of the arbitration provision because the provision was buried on page 153 of the 170-page SPD. It is unreasonable to expect that Platt would notice a new arbitration provision hidden in a lengthy document."

 [Platt v. Sodexo, S.A., No. 23-55737 (9th Cir. Aug. 4, 2025)]

Lois Baker, thank you for useful information on the “buried” difficulties I’m working on about other plan provisions and communications.

BenefitsLink neighbors, any help on my question about whether the way one discloses information about a discretionary contribution affects reliance on an IRS opinion letter?

The Discretionary Match notice requirement was part of the Cycle 3 Pre-Approved language.  IRS originally wanted to eliminate the discretionary match altogether as they felt it did not satisfy the definitely determinable requirement under Treasury Regulation §1.401-1(b)(1)(ii).  They compromised and allowed it with two parts 1) The Plan Sponsor communicate in writing to the Plan Administrator/Trustee, and 2) The Plan Sponsor/Plan Administrator communicate the match to the participants so that the match is definitely determinable to participants.  I believe that language is in all Cycle 3 documents.

David D, thank you, this is what I'm asking about.

Does the IRS require that the (2) information to participants be a separate notice?

Or is it enough to put it in the summary plan description?

There appears to be some nuanced interpretation of when the participant notice is required.

Backing up a little bit, the IRS was concerned about 2 issues going into Cycle 3 about the match needing to be definitely determinable.  The first issue was the total amount of the match to be funded had to be communicated by the employer to the Plan Administrator or Trustee before the contribution was deposited into the trust.  This is a simple formality and parallels the documentation required for specifying a discretionary profit sharing contribution.

The second issue was whether the match is definitely determinable meaning do participants know who gets the match, what is the frequency the match is made, and how is each participant's match calculated. The elements needed to determine the match include specifying:

• matching period (e.g., annual, each payroll, quarterly...)
• allocation formula (e.g., fixed percent, percent by tiers, flat dollar...)
• eligibility (e.g., varying allocations by business unit)

If all of these elements are explicitly defined in the document (some plan say "fixed", "rigid" or similar adjectives implying could only be changed by plan amendment), then there is no need to send a notice to participants.  In this instance then the SPD effectively communicates to participants about a definitely determinable match in the same manner in which a discretionary profit sharing contribution is communicated to participants.

If any of these elements are not explicitly defined in the document (the plan sponsor can has discretion), then a notice is required to be sent to participants within 60 days after the last match is funded for the plan year.  This timing requirement could vary considerably from year to year.

One interesting note is the notice is an IRS notice (subject to the IRS rules for electronic delivery), why the SPD generally is a DOL disclosure.

Another interesting note is that the notice requirement seems to apply to only to pre-approved documents.  Apparently an individually designed plan possibly may not be subject to the notice requirement.

@Peter Gulia the IRS uses the term "communication" rather than "notice".   The timing of the communication is no later than 60 days after the last discretionary match has been deposited for the plan year.  I don't see how you can comply with the timing requirement by simply putting it in the SPD.  Are you anticipating distributing an SPD each year after the last deposit for the year?  There is no model communication, so any communication that satisfies the required elements (timing and content) would suffice. 

Also, there is no statutory or regulatory requirement for this communication.  The notice requirement language was included in Cycle 3 plan documents as part of the compromise discussed above.  Failure to provide the communication (if required by the plan document) would be an operational failure.  

Paul I and RatherBeGolfing, thank you for your great help!

I knew this call for a communication (only the recordkeeper describes it as a “notice”) is an aspect of using IRS-preapproved documents, and is not directly specified in the Internal Revenue Code or a Treasury rule.

I don’t read the recordkeeper’s explanation of the IRS’s condition, or the plan documents’ provision, as precluding delivering the information before the contribution is made, or even before the beginning of the period, likely a whole year, regarding which the contribution is determined.

The SPD describes, with all details, the anticipated allocation of the matching contribution, and tells a reader that a change (if any) will be explained in a revised summary plan description.

If there is a change (likely an increase), the administrator would deliver a revised summary plan description promptly after the plan sponsor decided the change, and no later than when the contribution is credited to participants’ accounts. If the IRS’s condition is no later than 60 days after the contribution is made, there would be no risk of missing that timing.

On 9/19/2025 at 1:50 PM, Peter Gulia said:

I don’t read the recordkeeper’s explanation of the IRS’s condition, or the plan documents’ provision, as precluding delivering the information before the contribution is made, or even before the beginning of the period, likely a whole year, regarding which the contribution is determined.

I would agree with this interpretation if all notices were consistent.  For example, If you have the information necessary for the communication in the SPD, but then have a subsequent annual notice with more generic language like "The Company may, in its sole discretion, make a matching contribution on your behalf...", it would be an issue.

Yes. The communications regime I'm thinking of puts all communication about this in the summary plan description, and none in a separate writing. It's for the unusual employer that doesn't rely on its service provider and instead manages, with its lawyer's advice, the plan communications.