Corrective amendment to pass 401(a)(4)

[Guest sueczer]

I'm looking at the Treasury regs regarding a corrective amendment necessary to pass the Average Benefits Test for 2005. 1.401(a)(4)-11g. Our intention is to increase benefits for the NHCEs to a level that will pass the test for 2005. The regs say the corrective amendment may retroactively increase accruals as if they were adopted and effective as of the first day of the plan year. Do you think we have to redo our beginnning of year valuation which will increase our funding requirement ..Or do you think we can execute the amendment, leave the valuation and funding as it was before the amendment and complete the testing as though the amendment were effective as of 1/1/05.

[Blinky the 3-eyed Fish]

Not only do you not have to recognize the amendment in your valuation, you CAN'T. The amendment is past the 412©(8) period of 2 1/2 months after the plan year end. You can never recognize an amendment adopted after that date for a valuation.

But let's say the amendment was adopted by 3/15/06. An amendment adopted after the plan year, no matter when it is effective, does not have to be recognized. Rather, you have a choice as to whether or not it is recognized in the valuation.

[AndyH]

Never say never.

How's that for thoughtful insight?