Correct application of TAM 9735001

[Guest merlin]

A client sponsors a profit sharing plan that allocates contributions on an integrated basis. The owner makes < TWB, so allocation is effectively comp/comp. Sponsor has historically contributed 25%of comp. Plan requires 1000 hours and employment on last day of PY for actives to get an allocation. Retirees share regardless of hours.

Client wants to amend to a tiered allocation. One participant retired 3/1/08. What is the correct application of 9735001?

1. Can't amend for 08. Start a new plan.

2. Amend for 08, but make sure the retiree gets 25%

3. Something else?

[AndyH]

I'd amend it and make sure the retiree gets what he would have pro-rata. A more aggressive approach would be to preserve what the pro-rata allocation would have been based upon comp through the retirement date. I woudn't do that but I'm sure others would. I think I remember Mr. P. proposing that here once, but I won't name names just in case my memory is faulty.

[Guest merlin]

Andy,

Given past history, the retiree would get 25% of pay through his retirement date. Is that what you're considering to be the more aggressive approach?

[AndyH]

I was thinking of a formula change after the allocation requirements had been met but without a retirement. Never mind. I think you just need to give him the same amount that he would gave received without the change. Sorry for the confusing comment. It seems pretty straight forward.

[Guest merlin]

I was thinking of a formula change after the allocation requirements had been met but without a retirement. Never mind. I think you just need to give him the same amount that he would gave received without the change. Sorry for the confusing comment. It seems pretty straight forward.

[Guest merlin]

@#$% finger spasms. Thanks, Andy.

[Mike Preston]

Moi? Without a new plan, I don't think so. I suppose it is possible if you establish multiple allocation dates. Seems like a lot of work for one participant's reduction (not elimination) of 10/12 of what they might otherwise get, which starts out at only 2/12 of a normal year.

[AndyH]

I have high confidence in our resident archivist WDIK to have the prior comments readily indexed. And, yes, that was the idea. Now who else would have thought of such a thing?

[WDIK]

This thread?

Or this one?

(I wasn't sure to which point you were referring.)

[Mike Preston]

If any, the former. But I don't think either works to address this specific issue. Although the first of the two is closer to the mark, I think.