Retroactive Amendment question

[Guest chris4013]

Calendar year plan. On January 1 they began to use a 3 months of service requriement from 6 months. Due to a back log and late notice we are now getting the amendment out. Any issues?

Our document person feels the amendment can not be effective until 7/1. I think since it is increasing benefits you can make it effective 1/1.

[R. Butler]

So participants are being allowed to enter before the document says they can enter. The last I checked the prescribed correction in such situations is to amend the doucment so that those employees would have been eligible.

In short I short I think your O.K. with the retroactive amendment.

[Blinky the 3-eyed Fish]

How about neither of you are right or you both are right. While you can make the amendment retroactive for some purposes, what you can't do is make it retroactive if you are talking about allowing 401(k) deferrals. In other words, if Billy was due to enter the plan on 4/1 based on 3 month eligibility and he started deferring on that date, but you didn't have the amendment in place yet, well that's a problem.

Of course 2003-44 offers some discussion on the subject and depending on who was allowed to defer, the acceptance of the retroactive amendment may be appropriate.

I assume you were talking about 401(k) since this is the board you posted it on, but if not, then provide more details.

Ah, Butler beat me. We are saying the same thing except the need to consider what HCE's & NHCE's are being let in.

[R. Butler]

How about neither of you are right or you both are right. While you can make the amendment retroactive for some purposes, what you can't do is make it retroactive if you are talking about allowing 401(k) deferrals. In other words, if Billy was due to enter the plan on 4/1 based on 3 month eligibility and he started deferring on that date, but you didn't have the amendment in place yet, well that's a problem.

Of course 2003-44 offers some discussion on the subject and depending on who was allowed to defer, the acceptance of the retroactive amendment may be appropriate.

I assume you were talking about 401(k) since this is the board you posted it on, but if not, then provide more details.

Ah, Butler beat me. We are saying the same thing except the need to consider what HCE's & NHCE's are being let in.

Well I want to be right, so I'll defend my position.

As you mention I'm pretty sure that 2003-44 provides the relief. The prescribed correction method is to amend the plan to include the ineligibles. (Now if the people affected from this amendment are mostly HCEs you do have a problem & should have mentioned that in the first post.) I don't recall if 2003-44 has it, but the Rev. Proc.s. leading up to 2003-44 had examples of this situation.

[R. Butler]

Ah, alas I see I missed the last line of fish boys post. He was not saying I was right & wrong; he was that Chris & the document person were right & wrong. I have no problems with someone else being wrong.

I now apologize for my defensiveness in the prior post.

[david rigby]

I have no problems with someone else being wrong.

That is very charitable of you.

It is possiblethat Blinky was getting at something else. Does the plan have a PS component that is also impacted by this (proposed) change in eligibility?

[R. Butler]

I'm all heart.