403(b) Plan Amendment

I have a 403(b) plan with a 1/31 year end.  HCEs are excluded from the fixed matching contribution formula, but after performing the ACP test, it appears that HCEs could be allocated a small matching contribution and the tests would still pass. The Employer wants to amend the plan to allow such discretionary matching Employer contributions which would apply to HCEs for the Plan Year Ending 1/31/21, as well as a true up provision for the fixed matching contributions that are already in the document that would only apply to NHCEs.

Does this seem okay if the Employer signs the amendment before April 15th?

 I am assuming you are talking about a 1/31/21 plan year end? I may have missed something here, but why would it be ok to amend a plan to provide for a contribution to anyone for a plan year which has already passed?  Not OK as far as I know. And I believe a true up which would apply only to HCE's is discriminatory.  I doubt if a pre-approved document would permit this anyway.

I would suggest a discretionary match which includes all Participants, including the HCE's,  for the plan year ending 1/31/2022 (easy and painless to take matching out if the test fails).  The plan sponsor needs to decide on whether or not to true-up in the future, but whatever they decide applies to all Participants.

Anytime you are discussing bending a rule for HCE's, the alarm bells should go off.  

PNJ

The deadline for adopting a discretionary amendment is the last day of the plan year in which the amendment becomes effective.  The IRS established this deadline in roughly 2007.  So, no, it is not permitted to adopt an amendment now for a plan year that ended 1/31/2021.

See Revenue Procedure 2007-44.