Mid Year Suspension of Non-elective Contributions

[J. Bringhurst]

Is anyone aware of formal guidance on an employer's ability to suspend non-elective (and non-discretionary) employer contributions mid year? Client has a July 1 plan year profit sharing plan (no deferrals; no matching contributions) that provides that the employer will make contributions based on a percentage of compensation for the plan year if the employee has been credited with at least 1,000 HOS during the plan year and is an active participant on the last day of the plan year. Even though the contribution is plan year basis and is based on plan year compensation, I think that we can suspend currently since no participant has reached the last day of the year allocation requirement. If the plan did not have this last day of the year requirement, however, I think we'd be out of luck. Some that I've consulting seem to think there may be a Rev. Proc. on this issue (maybe with regard to money purchase pension plans), but I cannot seem to locate.

[Guest Sieve]

There may be a Rev. Proc. out there, but I see this as a simple 411(d)(6) issue--i.e., due to end-of-year & y/s allocation requirements, the accrual can cease since no one is yet entitled to an accrual for the year at this time (except, perhaps, those who already have received one).