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Retroactive Amendment


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We administer a 401(k) plan that has an in-service distribution provision. The age is 59 1/2 for salary deferrals and safe harbor contributions and 59 1/2 for profit sharing. We sent the client an amendment to eliminate the age on the profit sharing source about two months ago. The amendment indicated that the change would be effective November 15, 2023. Even though we told them to execute before November 1, 2023, they executed today. The plan has a participant who is requesting an in-service distribution.

There is no reduction of benefits here nor is there any cut-back. Does it really matter that this became a retroactive amendment because they waited so long to execute? Since no other participant has ever taken an in-service distribution I would think that even though the amendment has an effective date of 11/15/2023 it really has an effective date of December 6, 2023 because it was signed today.

Anyone disagree?



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This is a discretionary amendment so as long as it is signed by 12/31/2023 it can be effective retroactively to any date in 2023 - even 1/1. Obviously that is not w/o risk if you administer based on a stated intent and then the amendment doesn't get executed. This is kind of like a CARES Act situation - yes we're doing/no we're not/memo accordingly/amend later. 

The only thing might be if you have a RK that won't execute w/o a signed amendment (but at this point the dates both in 2023 don't matter).

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services


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