Using matching contributions to reward employee achievements. (Document Update).

Recently, a client complained that he was sick of his company's 401(k) plan because matching contributions had to be made to the accounts of a number of employees who hadn't done a particularly good job for the company. For example, employees who use all of their sick leave are entitled to the same amount of matching contributions as those employees who had never missed a day of work. Employees working in key positions receive the same matching contribution as certain employees in low-level jobs who had no serious commitment to the company. Our client was particularly agitated by the fact that some employees benefited simply because they were in a better position to make elective deferrals. While he liked the idea of matching contributions because they encourage employee savings, he did not like having to treat all of his employees the same. After thinking about his …