Pre-funding in a Cross Tested plan

[Guest rmwright]

Okay - obviously this is a medical practice.

Plan Sponsor has pre-funded the contribution for the plan year for 6 groups and has specified the allocation for each group (it was specified by the plan sponsor on the check stub each time a deposit was made). Plan fails nondiscrimination testing based upon this specified allocation.

Is it permissible to reduce the allocation for a specific group or groups until the nondiscrimination testing passes and hold the amount of contribution not allocated for that specific group in suspense to be used for the next plan year?

415 and 404 are ok. I'm just concerned with the fact that each time a deposit was made, it was specified for each group.

Thanks!

[Mike Preston]

The contributions made and identified should not be reduced. The "fix", if one is possible, is to provide for additional contributions, as necessary.