Changing PS allocation mid-year

[cpc0506]

Currently the plan document allocates PS salary proportionate. Eligibliity requirements are 21 and 1 year of service. Once eligibile, there are no conditions on getting the allocation. The client has come to us (at the end of May) and requested a change to the document to allocate PS class allocated by participant. They want the change for 2010. Do I have an issue with changing the PS allocation mid-year?

Thanks for any guidance you can provide.

[rcline46]

Since there are no requirements for receiving the PS contribution, anyone eligible has already accrued the rights to a pro rata share.

The question is a pro rata share of what contribution. If you amend as suggested can you now make two contributions, on allocated pro rata on pay to date of amendment, and the per class on pay after the amendment date? Should you make two contributions (deposits) to show this? If you do it this way, does the first contribution have to be 'meaningful'? If so how much is 'meaningful'?

There are learned people on both sides of this question, so you will have to make the call.

[Guest Sieve]

You could establish a new PSP with a different allocation formula, and choose to make a disretionary contribution to the new plan at year-end rather than to the old plan.