Employers might want to change the way they make retirement plan deposits and contributions as a way to manage finances while the economy is struggling. There are a few things to consider before doing so.
First, understand that employers need to continue to deposit employee contributions promptly. Employers should be making those deposits to the vendor at the same time they are depositing payroll taxes for the payroll period.
Second, employers considering stopping a match need to review their plan document/adoption agreement to review what the matching requirements are. Some plans merely state the matching contributions are discretionary. Those are the easiest to adjust or stop the match. The plans that have a stated match and want to stop or reduce their match will need to have a plan amendment and will need to notify plan participants through a new Summary Plan Document or Summary of Material Modifications.
Safe Harbor Plans that are exploring discontinuing their safe harbor contributions need to consider that they will need to begin conducting non-discrimination testing.
Government and other organizations that have required contributions in place of Social Security contributions may not be able to stop those contributions, and they should reach out to their ERISA counsel for questions.
Please consult with your retirement plan provider and your retirement plan consult before making any changes to how you are operating your retirement plan. Your plan document may need to be amended with the adjustments that you are making.