Timing of catch up amendment

[Guest Lex]

Scenario:

Plan year end 6/30/02 fails ADP testing. One of the HCEs is over 50 as of 12/31/02. The Plan has not formally adopted an amendment allowing catch up contributions. Plan sponsor would like to be able to rechacterize some of this HCEs ADP return as catch up contributions.

Can this be done even though a formal amendment has not been adopted as of 6/30/02?

Notice 2001-57 says: "a good faith EGTRRA amendment is timely if it is adopted no later than the later of (1) end of the Plan year in which the EGTRRA change .... is required to be , or is optionally, put into effect under the Plan or (2) the end of the Gust remedial period for the plan.

I have read other materials that seem to indicate it must be adopted by the end of the Plan year... period.

Can we adopt the amendment now, with a 1/1/02 effective date?

The GUST remedial, as I understand it, will be until 12/31/02- the plan uses a pre-approved volume submitter.

[kocak]

My understanding is the amendment must be adopted by the later of 1) end of GUST remedial amendment period (12/31/02) or 2) last day of plan year in which catch-up provision is effective (06/30/02).

So technically, you could adopt the amendment by 12/31 and still have it apply to the plan year ending 6/30.

However, the EGTRRA amendment we use (pre-approved volume submitter) indicates that the effective date of the amendment is the first day of the first plan year beginning after 12/31/01. In our case the catch-up is not available until 7/1/02 so be careful.

mck