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SH Matching Plan - Am I allowed to amend during year to add more generous eligibility?


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Posted

Our company has a safe harbor matching plan. I know that there are few amendments that can be made during a plan year. Is it possible to amend the plan to allow a more generous eligibility/entry? Currently, our provisions are the maximum statute - 21/1 YOS, semiannual entry. I would like to move to 6 months of service, quarterly entry. 

I figure it can't be done but I thought I would check. 

Posted

The most recent IRS guidance on mid-year amendments to safe harbor plans is in Notice 2016-16. In III 3.D, you can amend eligibility requirements mid-year to prospectively exclude employees who are not currently eligible.  It should follow that you can also amend mid-year to make additional employees eligible.  But, note that depending on your situation, the timing of the amendment might be considered discriminatory under 1.401(a)(4)-5.  

https://www.irs.gov/irb/2016-07_IRB#NOT-2016-16

 

Posted

This change would be to make positions at our company more attractive overall. We don't have a certain employee in mind, and the amendment wouldn't benefit an HCE or anyone we anticipate becoming an HCE in the future. 

Thank you for the response!

Posted

Agree that it's permissible, but you'll want to consider whether to give 30 days' advanced notice (probably yes, but in certain circumstances advanced notice is not required).

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