Retroactive amendment for discretionary match to include true up

[karl]

Plan has discretionary match and currently the document election is to compute match with each payroll period.  Sponsor is asking to amend the plan to be a Plan Year election to allow for true up.  Now in February 2023, is this something that can be retroactively amended for 2022 plan year? 

[justanotheradmin]

The age old question- Why do they want to do this?

Who is going to benefit from it? Even if it is technically allowed ( I wouldn't do it personally unless there were three months left in the year if there are any NHCE eligible for the plan), if its going benefit the HCE more than NHCE, I would say it its not allowed because it doesn't pass discrimination testing. 

[JRN]

Current law provides that plan amendments must generally be adopted by the last day of the plan year in which the amendment is effective. This precludes an employer from adding plan provisions after the end of the plan year, even though the provisions may be beneficial to participants.

Section 316 of SECURE Act 2.0 allows discretionary amendments that increase participants’ benefits to be adopted by the due date of the employer’s tax return. But that section is not effective until plan years beginning after December 31, 2023.

[karl]

Thanks for the comments, appreciate the help!