Employer wants to amend its MP plan to lower the contribution for the existing plan year. There is a last day requirement in the plan. Assuming an appropriate 204(h) notice is given, can this be done? I am aware of some guidance in the area of a profit sharing plan, but not aware of what guidance exists, if any, in the money purchase plan arena. I know there are practitioners who will make these types of amendments arguing that there is no entitlement to an allocation until the last day of the plan year (which I personally think is a good argument). Is there any authority directly addressing this issue? Are most practitioners allowing such amendments, or is this considered a very risky approach?

I think an amendment should be allowed, the benefit for the year has not "accrued" on the date of the amendment. Check out the IRS' response to a similar question at an ASPA conference here:
http://www.reish.com/practice_areas/TechnicalTips/tip16.cfm

Also look at--Revenue Ruling 79-237 and PLRs 8329098 and 9109067

[This message has been edited by KJohnson (edited 04-27-2000).]