401k/PS plan - unused sick leave contribution

[t.haley]

Looking for guidance on the deadline for amending a 401k/PS plan to add contribution of unused sick leave feature. The facts of Rev. Ruling 2009-31 state that the plan was amended to add this feature in December, 2008 before the feature took effect in January 2009 (when PTO was granted to employees). There is no discussion elsewhere in the Rev Rul regarding timing of the amendment. I have read several articles that make the blanket statement that the plan must be amended before the beginning of the plan year.

Since this is an optional provision I would think it would fall under the heading of a discretionary amendment that must be adopted before the end of the year in which it is first effective. Client has already notified participants of new policy (contributing unused sick leave to 401k as a nonelective contribution) but 401k/PS plan document does not support it. Looking for something more than passing factual item in the Rev Rul to support conclusion that they cannot make contributions this year because they did not amend the plan before the beginning of the plan year (Jan-Dec plan year). Any guidance would be greatly appreciated!