Amending Plan Allocation on Discretionary Contributions

[kevind2010]

We have a client that has a discretionary profit sharing provision which allocates said profit sharing to any employee that was eligible during the year, regardless of hours, employment, etc. They would like to add a 1,000 hour requirement as well as a last day of employment requirement. Can this be amended during the middle of the plan year? I understand that typically a discretionary amendment just has to be adopted before the end of the year. In this particular instance however, my concern is taking away an accrued benefit since they are trying to be more restrictive. i.e., an employee that terminates previously would have received a contribution, while under the new provisions they would not...even though the contribution is discretionary and they may decide not to even make a contribution at the end of the year.

Does anyone have any insight on this?

[ETA Consulting LLC]

You cannot change the conditions for receiving an allocation after the conditions have been met. Such a change should be made the 1st day of the next plan year; and should be signed prior to then.

Good Luck!