Amend New DB Plan Retroactively

[dpav]

A brand new DB plan effective 1/1/22 was adopted in August, 2023. May the plan's formula be amended before 10/15/23 to increase benefits effective 1/1/22? The plan sponsors 2022 tax return has an extension to 10/16/2023.

Thank you.

[Bri]

I would think that you're subject to the -11g rules, where the increase in benefits must be nondiscriminatory.  And another result of the amendment being adopted more than 2.5 months after year end being that you're not going to be able to reflect the benefit increase in the valuation.

I just had something like this, where I grumbled, why wasn't the benefit change just made part of the original document signed last month?  Because I think then it would have been okay, because a retro-adopted plan is deemed signed on 12/31.

Willing to be wrong, though....

[dpav]

The plan document was based on the census data submitted for the proposal, and the plan document was based on the proposal run. When they submitted the final census data, the owners' salaries were much lower than those used in the proposal; however they would like a deduction as large as the one in the proposal.

Thank you, Bri.