deadline for Money Purchase Pension contribution change

Existing Money Purchase Pension Plan has 7% allocation.  Eligibility is age 21, 1 year of service - dual entry dates.  You will receive an allocation if you have met eligibility and are  employed on the last day of the year OR have worked 501 hours.

The plan sponsor is considering lowering the contribution percentage.  What is the deadline for doing that?  Can the plan be amended prior to the beginning of 2020 to reduce the contribution percent to 3%, effective 1/1/2020?  Could it be lowered during 2020 if the plan sponsor chooses to do so?

Thanks!

You can amend the formula for the year at any time prior to someone meeting the allocation condition to receive a contribution in the document. Once you have a participant who has reached the allocation condition you can not make it more restrictive for the year or you will have a 411(d) prohibited cutback. In you case once you have a participant credited with 501 hours you are locked in to the contribution.

Also because a Money Purchase plan is a Pension plan, make sure you are also in compliance with the 204(h) notice requirements with respect to timing if you cut future accruals.