Combo Testing, bad document drafting, and 11g amendment

[Dennis Povloski]

So, I'm taking over a CB that has been combined with a 401(k) Profit Sharing Plan for 401(a)(4) testing.

The 401(k) PSP document was drafted using an integrated allocation rather than a cross tested allocation. The amount of the PS contribution is discretionary.

If what should have happened is that the NHCEs needed to get a 5.5% PS contribution and the HCEs get 0% PS contribution, would it be possible to say that the employer decided not to make a profit sharing contribution, thus causing a testing failure, and then make an 11g amendment giving the NHCEs a 5.5% allocation?

Then we would amend the 401(k) to provide the correct allocation going forward.

Is that pushing it too far?

Thanks!

[Tom Poje]

if you are real lucky (but your name doesn't sound Irish) the plans are top heavy.

no profit sharing is made, but the top heavy is made. since the non keys (hopefully they are all the NHCEs) received a top heavy they have to receive the gateway minimum as well. (hopefully the document has gateway language as well)

then the HCEs get 0% anyway in profit sharing, which is what you wanted

[Dennis Povloski]

Boo, I hadn't thought about the Top Heavy part yet. Just brainstorming.

Now that I look at it, there are HCEs that are Non-Key...Booo!

This means that I do need to give the them something...grrr..which will most likely cause me to give the NHCEs something above the gateway minimum.

So my 11g amendment would just need to be for whatever is above the gateway??

Still something you would give your blessings to?

[Tom Poje]

that sounds correct