New plan using prior year %'s, but no contributions made in 1st plan year?

[jaemmons]

Plan was effective in 2003 (effective date of deferrals was also in 2003). However, no deferrals or matching contribs were made, nor were any other benefits accrued in the 2003 plan year.

Can the employer use the deemed 3% for both adp/acp testing in 2004, as there weren't any contributions made in 2003 or do they have to amend the plan to use current testing?

[Archimage]

I think you would need to amend to current year.

[Earl]

after 1/1/04 it is ok to do that?

[Mike Preston]

Nobody really knows, because the IRS has steadfastly refused to give us guidance on this point. Shameful. Unless they come out with something to the contrary, good faith would seem to be satisfied if changes made in the document up through the end of the plan year. Why it wouldn't be allowed through the RAP is beyond me. Personally, I think it should be consistent with the -11g amendment period, at least. The really agressive say it should be within the 2 year APRSC window.

So, Earl, take your pick!