I hate the stated match

Ary Rosenbaum

Ary Rosenbaum - The Rosenbaum Law Firm P.C.

A 401(k) plan doesn’t have to be treated like the Bible or any other type of book where every work is analyzed and studied. It can be open and not be as decisive. I believe. The best flexibility for plan sponsors and their providers is opportunities where things are open-ended by being discretionary.

One of the many foul-ups is the stated match formula. There is no reason for that. A plan document needs to have a stated match formula when a discretionary one will do. A matching provision that doesn’t tie the hands of a plan sponsor goes a long way to accomplishing the same goals as a stated match without the drama of having to fix things when the plan sponsor has to amend the stated match when financially, things go south. A stated matching provision ties the hands of plan sponsors when it doesn’t need to and it keeps options open that are closed when a stated match is in the plan.

As a plan participant, I would have liked a matching contribution every time I deferred, but as an ERISA attorney, I like companies that have a flexible discretionary match that could give them the opportunity for the plan sponsor to match at year-end.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

Written by:

Ary Rosenbaum

The Rosenbaum Law Firm P.C. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.