Amending from Plan Year Match to Per Payroll Mid-Year

[Hayden Taylor]

A Plan provides for a Plan-Year-based discretionary match with a year-end true up.  There are no allocation conditions on the match.  The sponsor is currently not making a discretionary matching contribution.  Can the Plan be amended prospectively, but during the current plan year, to a per-payroll match with no true up?  Or does this violate the anti-cutback rule?

For example: it is now April 2020.  The sponsor is interested in beginning a per-payroll discretionary match in June 2020, with no year-end true up.  Can we amend the match from plan year to per payroll, effective June 1, 2020?  Or does this constitute a cutback because employees will not receive a match on deferrals made earlier in the year?

Thank you in advance for any insight!

[Luke Bailey]

Hayden Taylor, interesting question, and opinions may vary, but I would think that if the match is discretionary and no discretion has yet been exercised, such that if the plan were not amended the employer could get to the end of the year and say the match is $0 for this year, that amending it now to start a payroll-based match would not be an impermissible cutback, or even a cutback.

[MWeddell]

I faced this issue today and came to the opposite conclusion.  One can't change the allocation conditions because it is a protected benefit once participants have satisfied them.