Another 11g amendment question

[Laura Harrington]

I rarely ever deal with 11(g) amendments, but I've 3 situations come across my desk within just two weeks that may require these amendments!

Here is the one I am dealing with now:

403(b) plan with discretionary New Comparability feature. 3 groups. Groups 1 & 2 are made up of HCEs. Group 3 is all of the NHCEs. For sake of the conversation let's say Groups 1 & 2 received 12% and Group 3 8%.

We are doing the 12/31/2008 plan year end work, although we did not restate the plan to our document until 1/1/2009.

The document in effect as of 12/31/2008 states the plan will satisfy the gateway rules using the broadly available allocation option. Why it was drafted this way is beyond comprehension, but that is indeed what it says.

The allocation does not satisfy the broadly available allocation option, so cross-testing is not an option. The plan cannot satisfy the rate-group test using the allocation rates or allocation rates with permited disparity, so based on the allocation of 12% to HCEs and 8% to NHCEs, the general nondiscrimination requirements are not satisfied.

Obviously, we could raise everyone in Group 3 to 12% to correct the violation without an 11(g) amendment. But let's say the client wishes instead to retroactively amend the plan.

If we were using the minimum contribution gateway (i.e. lesser of 1/3 of highest HCE rate or 5%) the gateway would be satisfied. The rate-group test would also pass using accrual rates.

Could the plan be retroactively amended to state that the gateway will be satisfied using the minimum contribution option? Or does the amendment have to state that certain NHCEs will be raised to 12% in order for the test to pass?