Prototype -11(g) Amendment

[austin3515]

OK, so I know there is no prohibition on having a -11(g) amendment add the lowest paid NHCE to the allocation first, and so on until coverage testing is passed.

My question is, are there any additional restrictions for -11(g) amendments on prototypes in terms of reliance on the pre-approved document? Or would this be OK?

[Mike Preston]

Don't quite understand the question. Prototype reliance is simple: don't change a single thing that isn't already provided for in the document or you lose reliance. So, you can make the effective date of your change retroactive and if adopted during the appropriate period it can satisfy the requirements for 11g, but if you have to change even a comma in the document itself, no go.

[austin3515]

To be more specific: In a non-standarized plan, could I amend the Plan under -11(g) to add in the lowest paid non-benefitting Participant?

[rcline46]

Of course you can. You now have an individually designed document and no reliance on the document letter. As the late great Alfred E. Neumann said - "What, me worry?"

[Kevin C]

If you want to stay a prototype, only if you can do the amendment using the choices available in the adoption agreement. Prototypes usually have optional fail safe language for coverage. The fail safe language will say how many get added and in what order.

From Rev. Proc. 2005-16, Section 19.03:

(4) An employer's plan will not fail to be identical to an approved M&P or specimen plan merely because the employer modifies or amends the plan to:

(a) Add or change a provision and/or to specify or change the effective date of a provision, provided the employer is permitted to make the modification or amendment under the terms of the approved M&P or specimen plan as well as under §401(a), and, except for the effective date, the provision is identical to a provision in the approved plan. Thus, an employer is not required to restate its M&P or volume submitter plan in order to change options under the plan or to specify different effective dates. Also see section 5.02, which limits an employer's ability to amend an M&P plan without causing the plan to be treated as an individually designed plan, and section 5.11, which requires the employer to complete a new signature page when the employer changes options in an M&P adoption agreement.

(b) Correct obvious and unambiguous typographical errors and/or crossreferences that merely correct a reference but that do not in any way change the original intended meaning of the provisions. No such changes may affect any qualification requirements of the plan. The Service in its discretion may determine that any such changes are not considered identical.

© Adopt model, sample or other required good faith amendments that specifically provide that their adoption by an adopter of a VS and or M&P plan will not cause the plan to be treated as an individually designed plan or cause the plan to fail to be "identical" to the approved M&P or specimen plan within the meaning of this section.

[austin3515]

Just confirmed with Corbel that to continue with reliance you must solely amend the document to check/ucheck boxes and fill in permissible blanks.

[jpod]

Your client needs to have all the facts so that it can weigh the choices: maintain prototype and be forced to contribute $X more for certain employees than it would have to do if it dropped out of prototype. There's nothing so terrible about going off prototype if it means avoiding a ludicrous 11(g) result.