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A pension plan covers Bill and Jill. Bill owns the business, Jill is a secretary. The plan was set up in 2010 using a unit benefit accrual of 10% x High3 x Service ( including all past service). The plan is amended as follows in 2017: the new formula is 20% x High3 x Service ( including all past service). We can't explain why this change was made ( takeover case this year), but question whether the 133% rule was violated. In fact the amendment has no practical affect since the benefits are already at the 415 lints based on original formula! But my question is whether a retroactive change in the accrual rate for all current employees for all years could affect the safe harbor. I don't see any violation since the change applies to all years of service. Checking the available vals there are no terminated employees since plan started. Any thoughts anyone?

X, owner of company A (with no employees) has maintained a defined benefit plan P for 4 years. Exempt from PBGC coverage as plan that exclusively benefits substantial owners. Plan P is substantially overfunded. X also owns (enough of) Company B so that A and B are under common control. Company B was established 7 years ago, but first had employees in 2013. in 2014, total of 6 employees with at least one year of service. After looking at controlled group, X is informed by his actuary that Plan P fails 401(a)(26) for 2014 and 2015. Surprise! I am expecting that an 11(g) amendment to extend eligibility to three employees of company B will be the correction for 2014 failure. Coverage and nondiscrimination will be tested based on controlled group assuming retro amendment was effective 1/1/14. Required contribution and max deduction will not be changed to reflect amendment. Along with the thousand other questions running through my head on how to best help X with this issue, What happens with regard to PBGC coverage for 2014? Plan P will no longer be exempt. Do they need to pay premium for 2014 based on retro amendment? Other facts: Plan P frozen effective mid year 2014. X would like to terminate Plan P and possibly establish a qualified replacement plan (DC) to which it would transfer excess assets and avoid reversion. So bringing more people into the DB will likely result in accrual of small benefits that would end up being fully vested.