Deducting Unfunded Current Liability

[Blinky the 3-eyed Fish]

I know that for small plans for plan years beginning in 2002 the maximum deductible contribution amount is not less than the unfunded current liability amount. However, benefit increases for HCE's resulting from plan amendments cannot be considered until 2 years after the later or adoption or their effective date.

So, if a plan does not reference the increased 415 and 401(a)(17) limits due to EGTRRA and requires an amendment to the plan to reference those new limits, does this count as an amendment for these purposes? I am thinking the 415 limit increase would not count as an amendment because it's the limit that's increased, not the benefit. Retroactively increasing the 401(a)(17) limit, however, does seem like a benefit increase.

Any thoughts or guidance out there?

[MGB]

The annual changes are not amendments for this purpose. However, it is still an open question as to whether the change under EGTRRA (a non-annual change) would be an amendment (I think it is). The IRS refused to answer the question for the 2002 EA Gray Book. From question 3:

Q. For this purpose, is the date on which a plan amendment is formally adopted the date it is “made”, or may an earlier date be considered the date an amendment is made if the plan is operated consistent with the amendment for amendments that reflect changes in the law or annual updates of IRC limits?

A. An amendment is made on the date it is formally adopted. Annual cost of living increases in statutory limits such as those in IRC §§401(a)(17) and 415(B) are not considered "amendments" for this purpose. No guidance was given as to whether changes made at the time of EGTRRA compliance would be considered "amendments" for this purpose.