Match computation period issue

We have a client who signed a plan amendment to change their match computation period from per payroll to annual with a true-up provision, but they signed the amendment with the wrong intended effective date. They intended to start the true-up for the plan year 2024 (for true-up to be paid in early 2025), but instead signed the amendment effective 01/01/2023. They don’t want to fund the true-up for 2023 as they have not budgeted for this.

To fix, we asked the RK to draft a document with effective date 1/1/23 with the original match computation of per payroll, while also drafting a second document effective for 1/1/24 with the change to annual with the true-up.

The recordkeeper is reluctant to process these as they say this could be viewed as a cutback of benefits. Do you agree with that? The plan has never funded a true-up and have been paying their matching contributions per payroll as they always have. Their match is also discretionary, the formula is not stated in the plan document.

It seems like their plan document allows some flexibility in the attached screenshot.

PAA Screenshot.docx

Is the recordkeeper also the plan document provider? 

Just because it can be changed 'at any time' does not be it can be retroactive. 

I agree with them, barring some unusual additional information, I would view going from a full year match computation period to a per payroll computation period as a cut-back, especially for a plan year that has already ended. 

Have you calculated the true-up? Is it a lot of money (I know that's relative)? Especially if it isn't a lot, or most of the true-up is going to the HCE or owners, perhaps the sponsor should focus on the positive aspects of a true-up and not the negative. 

Exactly when did the plan sponsor sign the document that stated the provision the plan sponsor did not intend?

Signed in November of 2023 effective 01/01/2023.