Adding a new retroactive PS Plan in addition to existing 401k/PS Plan

[TPAinPA]

We have a prospect that has a current 401k Plan in place with safe harbor match, new comp profit sharing.  The employer terminated several of the younger employees and now doesn't like the new comp allocation. 

Any thoughts about not making a discretionary contribution in the 401k, instead establishing a new retroactive PSP, grandfathering all current participants and not including a last day rule so those younger employees would be included?  Is there a trap I'm missing?

[Bill Presson]

Just do an -11g amendment to bring the terminated people back in to the existing plan. Now that will mean the contributions for those people would be deductible in 2026 and not 2025.  It your testing would work. Make sure vesting is addressed. 
 

You could explore doing a 401b3 amendment and it might work here instead. But I can’t promise that as I haven’t waded through everything. But if it does, the contributions would be deductible in 2025.