Jed Macy Posted March 1, 2007 Posted March 1, 2007 What is required (and when) to change from the prior year testing method to the current year testing method? As I recall from IRS Notice 98-1, this change needed to be amended into the plan before the start of the first year to which it was to apply. Now that they issued Treas. Reg. §1.401(k)-2© which says a plan may change from prior year to current year at anytime, does this mean, for example, that a plan amendment making this change could be signed on March 1, 2007 that is retroactive to the plan year beginning January 1, 2006 after it learns that it could pass using the current year method but not using the prior year method?
Tom Poje Posted March 1, 2007 Posted March 1, 2007 Based on Revenue Procedure 2005-66, such a change would constitute a discretionary amendment. [Rev. Proc. 2005-66§5.05(3)]. In the case of switching from current year testing to prior year testing (or vice versa), such amendment must be adopted no later than the last day of the plan year for which the amendment is effective. in other words, it is to late to switch for plan year ending 12/31/2006. or at least that is how I understand things
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