EGTRA Required Amendment

[Guest Chris May]

As I understand it, to use EGTRA for the 2002 plan year you must amend for EGTRA by the last day of the plan year. The latest the document could be amended is Septmeber 30, 2003 for all plan years.

I have some questions:

A plan that does not amend in the 2002 plan year; does that mean a participant could not defer $11,000 in that plan year? Does it mean a participant could not receive contributions equal to 100% of compensation, or $40,000?

If not, what exactly does it mean to not have a signed amendment by the last day of the 2002 plan year?

Will there also be a restatement of all documents for EGTRA?

[mbozek]

If the plan is not amended for the EGTRRA limits then the existing limits in the plan apply, e.g. 170 K comp limit instead of 200k, max contribution is lesser of 25% of comp or 35K , etc.

[Guest asire2002]

I'm not sure I agree. I believe you can use EGTRRA's provisions even if you wait until 9/30/03 to adopt your good-faith amendment, provided in so doing you do not run afoul of any cutback issues.

[Guest Chris May]

asire - When you refer to cutback issues, what kind of scenario would present such a probelm? My only thought would be a top heavy minimum where the highest key gets a 3% allocation on $170,000 but gives 2.55% to the non key's because that equals his allocation on $200,000. Since there is no signed EGTRA he could not use the $200,000. Or under a 401k only top heavy plan top-heavy minimums cease when they'd be requiredunder the pre egtra rules.

Am I thinking in the right direction or are there other scenarios that deal with cutback probelms under EGTRA?

[KJohnson]

Chris, you may want to look here:

http://www.corbel.com/news/technicalupdate....asp?ID=194&T=P