Changing plan year end from 12/30 to 12/31

[Brian Gallagher]

I have a client who wants to change the plan year end from 12/30 to 12/31. For one day, do I have to:

1. Do testing for 1 day?

2. File a form 5500 for 1 day?

3. Give everyone a year of vesting for 1 day?

4. Anything else?

Your thoughts, as always, are appreciated.

...bg

[Tom Poje]

by law vesting is a 12 month period. see 411(a)(5)

thus you will have overlap of hours. such a deal, work one day get full credit.

I suppose you could switch to elapsed time?????????????Maybe that constitutes a change in 'vesting schedule' so it wouldn't effect those with 3 years????

[Blinky the 3-eyed Fish]

1. What are you testing? Does someone benefit for the 1-day plan year? If so, then yes, you must test.

2. Yes.

[MWeddell]

Yes, you'll need to file a Form 5500.

There'll only be testing if there are contributions on December 31 itself. You might get lucky and not have any contributions then. If you do have contributions, the testing might not be so horrible because anyonw who's hit the 402(g) limit already will be 0%, which should help your test.

No vesting issue if you're on elapsed time. If you're using 1,000 hours method, then Tom Poje's comment already addresses that.

Other issues

- You'll need your amendment to be signed before hand. One can't retroactively change a plan year.

- Eventually you'll need an SMM or new SPD.

[Alf]

I would confirm that they aren't trying to undo a Rev. Rul. 90-105 or 2002-46 "product" because I think that special rules in Rev. Proc 2002-9 and Rul 2002-73 have to be considered as well.