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SH Matching Plan - Am I allowed to amend during year to add more generous eligibility?


erisa parrot
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Our company has a safe harbor matching plan. I know that there are few amendments that can be made during a plan year. Is it possible to amend the plan to allow a more generous eligibility/entry? Currently, our provisions are the maximum statute - 21/1 YOS, semiannual entry. I would like to move to 6 months of service, quarterly entry. 

I figure it can't be done but I thought I would check. 

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The most recent IRS guidance on mid-year amendments to safe harbor plans is in Notice 2016-16. In III 3.D, you can amend eligibility requirements mid-year to prospectively exclude employees who are not currently eligible.  It should follow that you can also amend mid-year to make additional employees eligible.  But, note that depending on your situation, the timing of the amendment might be considered discriminatory under 1.401(a)(4)-5.  

https://www.irs.gov/irb/2016-07_IRB#NOT-2016-16

 

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