Retroactive Application of $200,000 Comp Limit

[Guest merlin]

Is the retroactive application of the $200,000 comp limit subject to non-discrimination testing? Or is it still a matter of plan design- a safe harbor plan is still a safe harbor, a general test plnis still ageneral test plan?

[AndyH]

My understanding, which was reinforced at the recent ASPA conference, is that the retroactive application of the comp limit increase will not be a discrimination issue.

If the plan is general tested, of course, it will affect the discrimination testing result, but by itself it would not be an issue.

[Mike Preston]

If the IRS is going to be consistent (and I think they will be), then if your plan is a safe-harbor plan you may implement the higher limits retroactively as of the earliest date possible and your plan will retain its safe-harbor status without being subject to any non-discrimination testing. If your plan is general tested, then the increase will be tested in the year it is implemented. If the plan is a safe-harbor plan and the implementation date is delayed beyond the earliest date possible, the amendment will be subject to the non-discrimination rules applicable to amendments.