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Without regard for the propriety of the corrections relating to health insurance premiums, an employer can pay whatever extra bonus compensation the employer wishes to pay (except to union employees). As long as the employer is counting it as W-2 income, bonus it is for plan purposes. Just be claer the the employer is not engaging you for advice about the back story.

I think you could take the viewpoint that the subparagraphs under 408(k)(3) spell out how you can not discriminate in favor of HCEs, and since changing eligibility is not there, you can do it. FWIW.

There is very little to no guidance on point that absolutely applies to a SEP, but see the "shall not discriminate in favor of the HCE" provisions under 408(k)(3). Assuming the individal commenced employment in 2009, selecting service in more than two prior years could be considered discriminatory. Now, had the plan contined a two-year service rerquirement to begin with (possible to likely), amending it to three years (to exclude the newly hired employees) could also be considered discriminatory if there are any HCEs that could not meet the new eligibility requirementsa at the time the plan was established (a borrowed and related QP rule). Missing documents aside, a private letter ruling should be sought if extending the eligibility time period beyond the time a HCE was first eligible to participate. I am not aware of this question every being addressed in a PLR (or anywhere else, other than in my Answere Books), Any new SEP has to be treated as a continuation of the old SEP (whether it be called an amendment or restatement, or nothing at all). So, selecting three years, again may be problematical, especially for the employees hired in 2011 since there is no document. Client might consider using "0" requirement for current employees and using two or, if employment commenced in 2008, three years starting in 2013. Hope this helps answer all of your inquiries.