Retroactive Amendment

[Vlad401k]

Let's say the plan is cross-tested and the owners want to max out and give themselves the profit sharing contribution that will bring them to the 415 limit. The plan gives a 3% Safe Harbor non-elective contribution as well.

However, there is an allocation condition (have to be employed on last day of the plan year to receive an allocation) on the regular profit sharing contribution. A few people were terminated during the year and while they receive the Safe Harbor non-elective, they are not entitled to the regular profit sharing because they didn't meet the allocation condition. Because they don't receive the regular profit sharing contribution, the plan fails to allocate the minimum gateway.

My question is this: can the document be retroactively amended in 2015 in order to remove the allocation condition and allow all the employees to receive the regular profit sharing contribution?

[Lou S.]

First you might want to check to see if your Plan Document has fail safe gateway language just for this situation, I know our old prototype and current volume submitter both have such language.

If the Plan does, then you just allocate the gateway and assuming you pass all the other test than you are done, no need for amendment.

If the Plan doesn't have such language then yes this sounds like a classic 11(g) amendment situation to correct the failure.

[Vlad401k]

Thanks Lou.

Could you please enlighten me what the 11(g) amendment is and how it applies here?

Appreciate the help.