A dumb question

[bzorc]

I am in the process of updating a prior standardized prototype (Profit Sharing Plan) for GUST. Under the prior standardized prototype, the contribution was allocated to those participants who completed 500 hours of service during the plan year, or who were employed on the last day of the plan year.

Client would like to institute the 1000 hours/last day rule going forward (switching to a non-standarized prototype). Is this permissible? I have researched everywhere, and can't find any guidance. Thanks for any help.

[Archimage]

Yes, it is permissible. You are not getting rid of any benefits so this would not violate any anti-cutback rules.

[Kirk Maldonado]

I disagree with Archimage somewhat.

If the person has already completed 500 hours of service before the amendment is adopted, you can't condition that person's right to get an allocation upon his or her completing 1,000 hours. This point is made clear in the Section 411(d)(6) regulations.

[Archimage]

Yes, I agree with that point of course. What I meant is if no one has completed 500 hours for the current plan year then it is permissible. Unless they are marathon workers, no one is going to have that many hours for a plan year that started on 1/1.