401(a)(17) & Plan Formula Change

[wmyer]

A calendar year corporate profit-sharing plan has a matching contribution through 6/30/2004. Then, effective 7/1/2004, it eliminates the match and replaces the match with a nonelective contribution. Let's say you have someone who makes $150,000 in the first half of the year and $250,000 in the second half. Let's say the plan document doesn't address this, either. Do they get the matching contribution based on compensation of $150,000 or on $102,500? Do they get the nonelective contribution on $55,000; $102,500; or $205,000?

[AndyH]

My guess is that the "answer from the podium" might be "Do what is reasonable". I know of nothing in print that would answer this.

[QDROphile]

I would take another look at the plan document. The plan document will refer to and define compensation. Unless a special definition applies (e.g. for purposes of the nonelective contribution, compensation for the 2004 plan year does not include amounts payable on or before June 30), the general definition applies and most general defintions cover the entire year.

I doubt section 401(a)(17) has any efect on interpretation unless it is included in some special plan term.