Amend after the end of the plan year

[Guest ICannotDiscloseMyIdentity]

Cross-Tested plan where each eligible employee constitutes a distinct and separate class. Employer decided what Profit Sharing amount to contribute for each NHCE class before the plan year-end and sent in the funds and had it allocated (before the 06/30 plan year end).

The plan has a last day and 1000 hour requirement, so as you have already guessed, a handful of these "classes" have been assigned money by the employer which is now sitting there, but no one in that class is eligible for it.

The document states to apply forfeitures during the next plan year - 1st for expenses, 2nd to reduce contributions.

The plan passes 401(a)(4) even without these handful of NHCEs getting their P/S allocation (it passes coverage too, even without them getting this).

The employer would like to amend the plan to remove the last day / 1000 hour requirement for last year and for future years. No HCE would be affected for last year (none quit, all had 1000+ hours).

The employer would like to adopt a 100% immediate vesting schedule as well to have these funds vested for these NHCEs. The HCEs are all already 100% vested.

I don't see where this retroactive amendment would violate 411(d)(6), but I'm not confident that it would be allowable due to its retroactive nature (since we are past the year end).

What would you suggest?

edit: typo

[John Feldt ERPA CPC QPA]

Would it be possible to consider the amendment as a -11(g) amendment? I see no failure, but from other discussions I'm not sure the plan must fail to be eligible to adopt a -11(g) amendment.

[zimbo]

I don't believe this sort of amendment would be allowable under 411(d)(6). The basic principal is that by changing the allocation provision after the allocation date (in the case of your plan, this is the last day of the plan year), the allocation of the contribution (whether made during the year or after the year) would be lower for some, higher for others. Those getting a lower allocation would be violating 411(d)(6).

I'm not sure how you would consider this to be an 11(g) corrective amendment under 410 or 401(a)(4) since there was no failure to begin with.