Amendment timing

[dmb]

When is latest that a calendar year standardized profit sharing plan be amended, for example to a cross tested allocation?? Is it before any participants work 500 hours or is it prior to the plan year since active participants only need 1 hour to accrue the std allocation?? Thanks.

[kocak]

I've seen both interpretations. In practice, for a profit sharing plan, I am comfortable amending during the plan year, up until the time a participant has 501 hours of service.

mck

[AndyH]

The IRS takes the position that it is an impermissable cutback to amend the plan to change the formula once the allocation requirements have been satisfied. So, for example, in a standardized plan, the allocation requirements would be satisfied when somebody works 501 hours.

If the plan has no requirements for an allocation, then the amendment must be done before the year starts.

If the plan requires employment on the last day, then it can be amended at any time before the end of the year.