Timing of catch-up amendment

[Guest Catch-upper in the Rye]

Based on Notice 2001-57, I think employers who implement catch-ups on, say July 1, 2002 for example, have until the end of 2002 to amend their plans for catch-ups. The 401(k) regulations would normally require an amendment for an expanded 401(k) feature to be made in advance of the first payroll, but I think the Notice overrides this rule for catch-ups. My view is that this is like updating a plan for the increased 402(g) limits - no need to do it until the end of the year. Does anyone think employers should be amending plans now rather than waiting until the end of the year?

[MWeddell]

An employer must have adopted a plan with a cash or deferred arrangement (i.e. a 401(k) plan) before the effective date of any employee election to defer cash into the plan. Treas. Reg. 1.401(k)-1(a)(3)(ii). As long as the cash or deferred arrangement has been adopted, then the amendment permitting catch-up contributions may be adopted by the end of the 2002 plan year even though the plan has accepted catch-up contributions earlier during that same plan year.

In short, I agree.