This plan has a discretionary match contribution, which is determined for the entire plan year (not on a payroll period) basis. At the beginning of the plan year, employees were informed that effective for the plan year beginning January 1, 2002, and for each plan year thereafter, until modified by resolution of the Boards of Directors, the corporation shall match XX% of a participant’s salary reduction contribution, up to a maximum XX% of a participant’s compensation.

At the end of the 2002 plan year, the employer now wants to increase the match for the plan year. Can the employer do this?? I was under the impression that the employer must disclose the match formula for the plan year so eligible participant can consider the match formula in making their salary reduction elections.

Also, I and trying to find any regulations, notices, etc. that says the employer must disclose the match percentage before the plan year begins. ERISA 2520.102 is vague.

Thanks!

There is no requirement that a discretionary match be announced that I am aware of - that would make it non-discretionary. I think its advisable to announce it, and even more advisable to abide by it.

However, many plan documents do require the administrator to disclose this.

However, I doubt to much complaining would result from an increase in the contribution. The decrease is where you would run into a lot of problems.

I would recommend not increasing the cap, but rather the rate. So if the match was announced as 50% of 6%, revise it to 75% of 6%. That way, no one would have deferred more or less as a result of the change, and everyone deferring gets more money.