Prior Year/Current Year Testing

[Gilmore]

We have a plan that was effective 1/2/2002. The original document (prototype) was written such that the plan would use prior year testing and 3% assumed for the nhces.

Now that the plan has been tested we find that the plan will fail ADP testing using the 3% but would pass with current year numbers.

The ERISA Outline seems to indicate that an amendment to current year would be ok.

The plan WAS amended effective 1/1/2003 to be a Safe Harbor Plan and the new amendment says the plan will use current year testing.

The question is, should we do a separate amendment amending the testing method to current year effective 1/1/2002 or will the existing amendment suffice.

Thanks.

[Mike Preston]

By the language of your own post, the changes you made to the document are effective 1/1/2003. That, in and of itself, is not going to change your method of compliance for 2002.

So, a change is needed in order to use a different method.

It is a bit unclear as to when such a change would have needed to have been made in order to be "ok". Make the change, submit it, and you should get an LOD, along with 7805(B) relief.

[Gilmore]

Thank you.