Profit Sharing Amendments

Is it common to amend a plan at year end to add in a profit sharing arrangement?

Or is it okay to have a profit sharing arrangement in the plan that is not used? For instance we have a discretionary profit sharing arrangement for Pro Rata profit sharing on the plan but they do not do a pro rata contributions. If the plan also makes a safe harbor match then would they still not need to do compliance testing? Or does it lose the exclusion from compliance testing with safe harbor because it is an option for them to profit share? 

It is totally fine to have a "profit sharing" feature in a 401(k) plan and not use it.

Agreed - we routinely recommend that the employer have this option in their plan - if they never use it, no harm, no foul, but it is there. Sometimes, they still don't want it there, as they do not want participants to have any expectation of a profit sharing contribution, but that's unusual.

If you think about it, all 401(k) Plans are really just Profit Sharing plans with a salary deferral feature.  (Sure there are 401(a) qualified plans that have a 401(k) feature but the discretionary contribution provision is not chose int he adoption agreement, but the underlying document certainly addresses it.

Regarding compliance testing, a profit sharing contribution would be subject to ACP testing regardless of the plan's safe harbor status. But a pro-rata allocation would generally pass automatically. 

20 minutes ago, Zach Del said:

Regarding compliance testing, a profit sharing contribution would be subject to ACP testing regardless of the plan's safe harbor status. But a pro-rata allocation would generally pass automatically. 

Profit sharing contributions are not subject to ACP testing. They are subject to non-discrimination testing under 1.401(a)-4. Your last sentence is correct, though. If the PS formula meets a safe-harbor formula under the 1.401(a)-4 regs, then you pass.