Question about an amendment to remove SH restrictions

[jkharvey]

The SH 40k plan provides that the sh contribution only goes to participants who have met the statutory minimum age/service requirements (1 year/age 21). The plan is amended 7/1 (12/31 PYE) to remove this provision and now SH 3% nonelective has no such restriction. If a participant terminated 5/1 before the effective date of the amendment does the restriction continue to apply to them or is it all based on the plan provisions at 12/31 when the 3% is allocated?

[Jim Chad]

FWIW My first thought was that you s should look at the doc and see if it says to use whole years comp. But on second thought, I don't think it is most important if the doc says to use whole years comp.

It seems it should be more important to first decide who is eligible and I think it is a given that in a DC Plan, these sort of things would only effect people who work at least on one hour after the effective date of the amendment. If I understand you correctly the amendment has an effective date of 7/1/09. There fore I think that someone who left 5/1/09 would not get in.

[Kevin C]

Did the amendment change the deferral eligibility requirements? Or, was there only a change in the safe harbor provisions?

[Kevin C]

I decided to post again even though you didn't respond to my question. If the amendment did change the safe harbor provisions, then I think you have a problem with the 1.401(k)-3(e)(1) prohibition of mid-year amendments.

Another issue to consider is the 1.401(k)-3(b) requirement that all eligible NHCE's receive the SH contribution. If some of the participants eligible to defer who have not met 21 & 1 receive the SH and others do not, you have not satisfied the SH requirements. If you treat the plan as two plans under 1.401(k)-3(h)(3), you should be able to limit the loss of SH to the portion of the plan with the participants who have not met 21 & 1. I don't know if the same argument would work with the mid-year amendment issue.