Increase 401k deferral for last 4 payrolls in Dec

Plan Doc indicates that deferrals can be changed semi-annually and at year end may increase the deferral over the last 2 months to increase the deferral to the maximum.  It makes no reference to increasing deferrals at year end for someone who wants to put in more at year end but not the maximum.  The Plan Sponsor has a participant who is a sales person and he wants to increase his deferral for the next 4 weeks by $500 per pay period.  He currently contributes $100  per weekly pay period.  They do not pay bonuses at year end to anyone.  Based on the way the plan is written, can he increase his deferral for the last 4 weeks of the year even though he will not be anywhere near the maximum?

I would argue the limitation of allowing the increase "only to maximum" is dicriminatory in practice and interpret it as increases in the last 2 months are allowed.

That said, I'm not sure why in this day and age the Plan doesn't allow changes as frequently as the participant want to fill out new forms but that's a separate issue.

Yes, we recommended that the Plan Sponsor amend

 this to allow a change in deferral at any time.

17 hours ago, Lou S. said:

I would argue the limitation of allowing the increase "only to maximum" is discriminatory

That is indeed some crazy language...makes you wonder what someone was thinking and how it got in there.

18 hours ago, DDB BN said:

Plan Doc indicates that deferrals can be changed semi-annually and at year end may increase the deferral over the last 2 months to increase the deferral to the maximum.  It makes no reference to increasing deferrals at year end for someone who wants to put in more at year end but not the maximum.  The Plan Sponsor has a participant who is a sales person and he wants to increase his deferral for the next 4 weeks by $500 per pay period.  He currently contributes $100  per weekly pay period.  They do not pay bonuses at year end to anyone.  Based on the way the plan is written, can he increase his deferral for the last 4 weeks of the year even though he will not be anywhere near the maximum?

Just to pile on....

Yes, I would read it to allow him to increase by any number he wants in that period.

Yes, this is absurd language. Why is it in the plan? Who wrote it?  Does the client even care if participants could change their elections anytime they wanted?  While I would amend THIS plan to change the language, that's not really true because I would  never  have a plan with that language anyway.  Talk to the client and ask permission to change the language and go from there.

He is increasing "to" get to maximum, just doesn't make enough to get there. I practiced baseball as a kid "to" play for the SF Giants, just didn't make it. Obviously, without seeing the language I can't be sure, but generally agree with others that it should be OK.

If the plan language is specific stating the "maximum" is up to the 402(g) Limit only; would you have an potential effective availability issue?  Depending on the employee population, would only HCEs practically be able to take advantage of this kind of provision?