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11(g) Amendment for 414(s) failure?


chibenefits
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Just because the compensation definition fails doesn't necessarily mean that there is a failure. Just do the test using a non-discriminatory definition of compensation and see if you pass. If you do there's nothing to do. If you don't then the 11g amendment looks good.

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Since the 3% SHNEC is required to use a 414(s) compliant compensation definition, it will need to be amended.   An -11(g) amendment is treated as if it were adopted and effective as of the first day of the plan year [1.401(a)(4)-11(g)(1)], so it works if the amendment is adopted by the 15th day of the 10th month following the end of the plan year [(1.401(a)(4)-11(g)(3)(iv)].

If you have access to the IRS Q&A session handout from the 2012 ASPPA annual conference, this situation was question 39. 

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