Mid Year Increase to SH Match Formula

The SH plan in question will be increasing their match at some point during the 2020 plan year (plan year is calendar year).  The match is calculated on a per payroll basis and that will not change.  The plan will need to apply the new matching formula back to the first day of the plan year and re-distribute an updated SH notice.

If the increase happens after the first quarter of the plan year, will the plan also need to consider providing earnings as not all of the match would be deposited on a timely basis (i.e. quarterly)?  I believe that this is the EPCRS fix for late SH contributions when they are calculated on a per payroll basis but not allocated in a timely manner.

I would greatly appreciate any commentary on this.  Thank you.

AJ North, I don't think so. The amendment you describe is clearly permitted under Rev. Proc. 2016-16, and illustrated in Section E of that Rev. Proc., Example 3. There is no mention of having to provide earnings for the period that the higher match walks back, and that would be incredibly complicated. Maybe someone will chime in saying they heard the IRS say something different at a conference, but I doubt it. That would be supplementing what would be a very significant omission from Rev. Proc. 2016-16.