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tymesup

Floor offset - minimum participation

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I think this issue was directly addressed by Jim Holland at the COPA conference this last weekend. My understanding of what he said is that the IRS would not force one to set up two plans to accomplish a proper offset and satisfy 401(a)(26). That, to me, makes it clear that a partial offset is allowable. Have fun tracking everything, of course.

Hopefully, he'll be asked the same question at the ASPPA Annual conference and answer it the same way.

This is why I was surprised by the memo. Both Jim and Marty have said at conferences over the past year or so, and in preconference meetings, that they believed that they were allowing the partial offset and seemed to give the go-ahead to the design. The question of course, then, is why does the memo bring up "uniform and reasonable" and imply that it is a somewhat limited definition.

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Suppose a plan had a tiered allocation in past years, but was uniform this year. Could the entire account balance be used as an offset this year? Or is this arrangement tainted forever?

Thanks again for any help on the subject.

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Unless the plan tracked or could track the uniform portion of the prior account balance and use only that portion for the offset, I think you've got problems. You could start to track future contributions in a different bucket...

I don't see how you could use the entire balance as an offset

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