Sponsor to contribute "missed earnings" but no late contributions occurred

[John Feldt ERPA CPC QPA]

Plan sponsor decided (without service provider knowledge) to contribute the 3% safe harbor throughout the plan year. Safe harbor is based on full year's compensation, including wages prior to date of entry.

For new entrants, the plan sponsor contributions made during the year were based only on wages paid after date of entry.

After the plan year-end, the service provider calculates the full SH amount due. Plan sponsor contributes the remaining amount due well before the safe harbor contribution deadline (before the end of the plan year following the SH year).

The plan sponsor feels that they short-changed the new entrants, so they want to contribute an amount to make up for "missed earnings" on their safe harbor contributions that were made after the end of the plan year.

Since no contribution is actually late, is there any justification for a "corrective contribution" to be made to the plan as described?

[david rigby]

Sounds like an extra contribution. Would the plan need amendment? or require a different allocation basis?

[Bird]

I see no justification for adding earnings. If the plan allows for varying contribution amounts, then they might be able to add the desired amounts as extra contributions. But I would certainly try to convince them that it's not worth the effort and expense.