Testing - Plan Amendment

[wmyer]

I have a 401(k) plan that had a match formula for the first half of the year, then they removed the match formula mid-year and added a non-elective formula.

When doing the ACP test, do I use compensation just for the first half of the year, or the entire year?

When doing the 401a4 test, do I use compensation for the second half of the year, or the entire year?

When doing 410(b) for each component, do I use the employees who were non-excludable for the entire year...or do I use the ones who were non-excludable for the first half towards the matching, and the ones who were non-excludable for the second half towards the non-elective component?

Any cites?

[austin3515]

Most plan's say you can use any 414(s) definition for non-discrimination. A good plan document will give you this flexibility, and most do.

Are you sure your nonelective isn't a safe harbor?

Coverage is based on the whole year. When doing the ratio percentage, of course compensation or the amount of the benefit means nothing. IF your doing the average benefits test, the same 414(s) requirement applies.

All I can tell you for a sight is the applicable regulations...