Amendment to switch to prior year testing

[Guest terryh123]

Plan calls for current year testing. Switching to prior year testing would reduce refunds required. Proposed Regs say that plan document must specify method to be used. Therefore, plan amendment is required to switch method of testing (and use of current year testing for last 5 years to switch to prior year testing). Is anyone aware of any authority to adopt a plan amendment before March 15 (deadline for correction without paying excise tax) to switch to prior year testing? Normal rule for plan amendments is that they have to be adopted prior to year end (and perhaps earlier to avoid anti-cut back issue, which we don't have here).

[Tom Poje]

this one has come up a number of times.

and the answer is that no one knows for sure at this time.

I understand some IRS officials actually think the amendment has to be done before plan year begin!

Currently I hold (though haven't actually had to exercise it) to the idea that since any refunds have to be completed by 12 months after plan year end, it is reasonable that you could amend within 12 months after plan year end. I have seen others hold to this position as well.

but, no one knows for sure.

[Guest terryh123]

Tom Poje: Thanks for reply. That sounds reasonable since it all relates to testing anyway, so why not be able to amend by March 15 if you want to correct and avoid 10% excise tax or within 12 months otherwise? I appreciate that IRS may take the position that amendment needs to be in place before year end. Thanks again.

[Guest CBS]

Beware of the following year's test from one who has switched to avoid problems currently.