Irrevocable Waivers

[Guest acathcart]

I have a client with a money purchase and a 401(k) plan. When two (2) newly hired doctors became eligible for participation in the retirement plans, both doctors signed waivers foregoing their rights to participate in the retirment plans.

Several years passed and now both doctors have become partners in this LLC and would like to participate in the retirement plans.

Can these two (2) doctors begin participating because their status changed from employee to owner? Or, Does the waiver eliminate them from ever participating in a retirement plan sponsored by the employer?

Can someone give Reg cites that I can look up with regard to Irrevocable Waivers and there effects on participants?

[M R Bernardin]

Have you looked at the 401(k) regulations? Rules regarding waivers originate there, because whether a waiver is irrevocable or not affects whether the waiver is a cash or deferred arrangement under 401(k). I don't think you'll find anything directly on point in those regulations other than the rules regarding what constitutes an irrevocable waiver, but you might if you have access to PLRs. If you find anything definitive, I would be interested. Off the top of my head, my guess is that the risk is that the IRS could under the right set of circumstances take the position that you had a non-qualified CODA in place during the years the "irrevocable" waiver was in effect. It may necessitate going back and looking at how testing was performed during those years as well.