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Non-Payment of Profit Sharing

njjelnjjel 1,235 Posts
in Benefits & Leave Vote Up0Vote Down
Does anyone know of any regulation under ERISA or otherwise that states the employer must notify a participant in the plan that a contribution is NOT going to be made? The amount of our contriubtion is discretionary and is to be made on a quarterly basis. If one quarter we find we can not make a contribution, do we have a LEGAL obligation to inform the participants?
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  • 2 Comments sorted by Votes Date Added
  • Jen DJen D 33 Posts
    PMVote Up0Vote Down
    If the plan document states that the profit sharing contribution is discretionary, then there is no legal requirement that the participants be notified that there will be no contribution.

    However, the "big" picture is employee relations and morale. If your employees have come to expect that deposit around a certain time each quarter, and it suddenly doesn't appear, you will probably receive the same number of phone calls as there are participants in the plan. You may want to consider some carefully-phrased correspondence as to why there is no contribution this quarter.
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  • njjelnjjel 1,235 Posts
    PMVote Up0Vote Down
    I concur, but upper management unfortunately, does not.
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