Alonzo

Check the amendment provisions of your document. If the plan says the document may be amended by the "company", you are sunk, since signature by a corporate officer may well be enough to put the amendment into effect. However, the amendment provisions may require board approva for all amendments, or amendments which change the contribution formula or allocation formula. Incidentally, I agree with your reading of the situation with respect to the formula, and the allocation of forfeitures.

There are a lot of assumptions in your example. The big one is that there is a valid employer/employee relationship between the leasing organization and its employees. Another one is that 100% of the employees of A, B and C are now the "employees" of the leasing organization. Given your presumptions, what you say is correct. The former employees of A, B and C are treated as employees of the leasing company, for the purpose of determining whether the plan of the leasing company passes coverage and nondiscrimination. This would be true even if, for some reason, the benefits of some of those employees were taken into account in determining whether a plan of A, B or C met the nondiscrimination requirements.

If you repay the over the limit contributions, you have to re-run the ADP and ACP tests, if you are using the current year method. So things may not be as simple as "just pay it out." Has anyone considered just doing a retroactive amendment increasing the limit for the year in question? As long as it's just NHCEs who've fouled up, and the limit has not been enforced on anyone by the administrator (which sounds like the case), this would appear to be the simplest solution.

The following is from IRS regulations on HIPPA: (1) In General. The requirements of §§ 54.9801-1T through 54.9801-6T and 54.9802-1T do not apply to any group health plan in relation to its provision of the benefits described in paragraph (B) (2), (3), (4), or (5) of this section (or any combination of these benefits). 54.9804-1T(B)(2) Benefits Excepted In All Circumstances. The following benefits are excepted in all circumstances- (i) Coverage only for accident (including accidental death and dismemberment); (ii) Disability income insurance; (iii) Liability insurance, including general liability insurance and automobile liability insurance; (iv) Coverage issued as a supplement to liability insurance; (v) Workers' compensation or similar insurance; (vi) Automobile medical payment insurance; (vii) Credit-only insurance (for example, mortgage insurance); and (viii) Coverage for on-site medical clinics. I believe there is matching statutory language that provides that disability insurance is not covered by HIPPA.

Has anyone seen guidance (or heard IRS folks opine) about the multiple use test after SBJPA? I'm particularly curious on how to do the multiple use test if, for some reason, an employer wants to use current year testing for his ADC and prior year testing for his ACP.