Amending Money Purchase Pension Plan - How frequent is too frequent?

[Guest]

I would assume the reason for going this route is you would run inton problems with the 15% limit in the profit sharing plan.

Another alternative (although you would incur the expense of a second plan)

is to have a money purchase at 3% (or more) covers top heavy, and then the profit sharing by class. then you probably wouldn't need to amen, so you save something there.

sorry, no experience with IRS in regards to amending often.

[SMB]

I am considering installing a cross-tested Money Purchase Pension Plan for a small employer (an "older" owner and 3 "younger" ees). Plan will have an end-of-year employment requirement, so that contribution is not "accrued" until last day of PY. Plan will initially have a contribution formula of 25% to owner and 8% to ees. Anticipate that the contribution formula may need to be amended "occasionally", depending on revenue and/or changes in ees for a particular PY. Although other threads have indicated that the IRS does not "like" frequent changes to a MPPP contribution formula, is there any statutory prohibition against same? Has anyone had any actual experience with the IRS in this regard?

[Guest Barnard Walsh]

The 3% top heavy minimum for a money purchase plan is a good partial solution. Perhaps, the company with 3-4 employees would be willing to spend the $3-5000 administration fee to have a defined benefit plan. Then the owner (if older) can truely receive a larger share of the annual contribution. Email me for more info at WalshCEBS@aol.com.