Changing Pro Rata Profit Sharing Allocation to New Comparability Mid-Year

A Safe Harbor Match plan currently has no allocation conditions for Profit Sharing and the formula for Profit Sharing is defined as pro rata.

Can the plan change the formula to New Comparability - One Group per Participant mid-year?

No profit sharing has been funded to the plan yet in 2024 and the plan document defines the period for determining the amount of an allocation of Non-Elective Contributions as End of Plan Year.

Thanks.

2 minutes ago, Vlad401k said:

currently has no allocation conditions for Profit Sharing

Well, the position of the IRS is that the existing formula gives the participants a "protected allocable share"  (i.e. IF an allocation is made for 2024, it must be pro-rata) and that such an amendment couldn't be implemented until 2025.

I've seen arguments that the IRS' position is inaccurate, but I wouldn't want to fight that battle

1 hour ago, Belgarath said:

Well, the position of the IRS is that the existing formula gives the participants a "protected allocable share"  (i.e. IF an allocation is made for 2024, it must be pro-rata) and that such an amendment couldn't be implemented until 2025.

I've seen arguments that the IRS' position is inaccurate, but I wouldn't want to fight that battle

Agreed. If the plan had last day requirements, I would argue the other way.

4 minutes ago, Bill Presson said:

Agreed. If the plan had last day requirements, I would argue the other way.

Yes, so would I.

They can start another PS plan for 2024 with new comparability, and merge them next year.

On 2/29/2024 at 10:43 AM, Bill Presson said:

Agreed. If the plan had last day requirements, I would argue the other way.

Would the argument the other way change if the plan had a last day requirement but also had allocation waivers for termination on account of death, disability, and Normal Retirement Age and someone had terminated already in current year due to one of those instances? 

3 minutes ago, Inquire401k said:

Would the argument the other way change if the plan had a last day requirement but also had allocation waivers for termination on account of death, disability, and Normal Retirement Age and someone had terminated already in current year due to one of those instances? 

That would make me hesitate and probably use Bri's strategy of a new PS plan and then merge.