Exclude HCEs from match

We have a plan that was supposed to exclude the HCEs from the matching contribution.  The original plandocument didn’t have the option.  The new plan document does, but the box wasn’t checked.  The plan was promoted as no contribution to HCEs in all the meetings and materials.  We are giving it to them for 2018, but don’t want to for2019.  Can we retroactively exclude the HCEs for 2019 effective back to 1/1/2019?

Yes, assuming nobody has met the allocation requirements to receive it yet. If the match allocation requirements include "employment on the last day of the Plan Year", you're good because nobody has yet met that requirement. If the allocation requirements are just "completion of X Hours of Service" then it's too late to make the change back to 1/1 if you've got anyone who's already worked X hours -- you'd only be able to change it prospectively.

To amplify duckthing's response, suppose there was a last-day requirement but that there is also an exception of that requirement in the event of death, disability or retirement, and X dies after the start of the plan year but before an amendment to exclude HCEs is both adopted and made effective.  In that case, it is too late for the amendment because X, whether or not an HCE, has already become entitled to an allocation, thus affecting everyone else's eventual share of the pie.  {I presume this is a pro-rata allocation method.}

The anti-cutback rule applies equally to HCEs and NHCEs, so it is not an argument that you are "discriminating" only against HCEs.  If the effect of the amendment is to give at least one participant more as a relative percentage of the overall contribution, then it follows that some other participant(s) will get less as a relative percentage of the overall contribution, and that is what is prohibited under IRC 411.   (In the case of a fixed contribution formula, the analysis is much simpler, as each participant gets whatever the formula says, i.e., the amount to be allocated to each participant is not dependent upon how many other participants are sharing.)

That is why employers might choose not to have any exception to the last-day requirement, and even when that is the case, any such amendment must be adopted before the last day of the plan year, as adopting it on the last day of the plan year (for such a plan) is a day too late.

22 minutes ago, Doc Ument said:

To amplify duckthing's response, suppose there was a last-day requirement but that there is also an exception of that requirement in the event of death, disability or retirement, and X dies after the start of the plan year but before an amendment to exclude HCEs is both adopted and made effective.  In that case, it is too late for the amendment because X, whether or not an HCE, has already become entitled to an allocation, thus affecting everyone else's eventual share of the pie.  {I presume this is a pro-rata allocation method.}

The anti-cutback rule applies equally to HCEs and NHCEs, so it is not an argument that you are "discriminating" only against HCEs.  If the effect of the amendment is to give at least one participant more as a relative percentage of the overall contribution, then it follows that some other participant(s) will get less as a relative percentage of the overall contribution, and that is what is prohibited under IRC 411.   (In the case of a fixed contribution formula, the analysis is much simpler, as each participant gets whatever the formula says, i.e., the amount to be allocated to each participant is not dependent upon how many other participants are sharing.)

That is why employers might choose not to have any exception to the last-day requirement, and even when that is the case, any such amendment must be adopted before the last day of the plan year, as adopting it on the last day of the plan year (for such a plan) is a day too late.

Mathematically, I take exception to the logic.  A little bit.  I would restate it as: "If the effect of the amendment is to give at least one participant with a 411d6  protected benefit less as a relative percentage of the overall contribution, then it follows that the plan violates 411d6.:"

The math is left to the student.