"Plan A for Company A: At the end of 2019 this plan matched 100% of 3.5% contributed - and was merged into Plan B. This plan had a 2-Year Cliff Vesting program for company match dollars (0/100%). In addition, this plan has the same automatic enrollment features (e.g., start at 3% and increase 1% each year until 6% is achieved) as Plan B.
Plan B for Company B: At the end of 2019 this plan matched 100% of the first 1% and then 50% of the next 5%. This plan had a 2-Year Cliff Vesting program for company match dollars (0/100%). In addition, this plan has the same automatic enrollment features (e.g., start at 3% and increase 1% each year until 6% is achieved) as Plan A.
Effective 1/1/2020, the two companies merged to become Company AB. Effective 1/1/2020, all employee contributions were INTENDED to be matched at 100% of
the first 3.5% contributed, the more generous formula. Their intent was to transfer the money from A to B in the first quarter of 2020, but COVID happened and they delayed until the market settled down; that transfer was initiated in the Fall of 2020 and has been completed. Now, Plan B has 100% of the money for Company AB.
However, the new Plan amendments never provided for the more generous standard -- 100% of the first 3.5% match. Nevertheless, all company B employees received the more generous match even though the new plan did not provide for it while it was being contributed.
Question is, can we amend the plan now under SCP to provide retroactively for the more generous match that company A and B employees both got, or must we go under VCP ? Section 4.05 (in the SCP section) in Rev. Proc. 2019-19 says the following:
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No employees were disadvantaged. In fact, former B employees benefited by the higher match--the plan just did not properly provide for it at the time. It's also well within the 2-year period for SCP. What do you think?"