-11(g) to elect fail-safe?

[austin3515]

We're using a prototype document and we are limited to selecting the options available for a -11(g) amendment. For example, we would have to reduce the hours requirement or eliminate the last day rule.

Can we do an -11(g) amendment to select the fail-safe provisions? The logic is that we would be able to run the average benefits test; if that fails, then we do a -11(g) amendment to elect fail-safe, which allows us to bring in one participant at a time until coverage is passed.

[MSN]

Interesting suggestion. I think it may depend on the interpretation of -11(g)(3)(ii). As I read it, the -11g amendment to elect fail-safe provision could eliminate a benefit for a participant that would have otherwise benefited if you used the provisions in effect immediately prior to the amendment. At the same time, nobody had met the eligibility conditions for the allocation anyway so there wasn't any accrual to eliminate.

I don't think it's clear either way, so I'd be inclined to push the limits.