Is there any way to exclude a non owner dentist from TH and let him defer in a Sole Prop?

[Jim Chad]

Is there any way to exclude a non owner dentist from TH and let him defer in a Sole Prop?

Details are as follows: The plan was amended in 2007 to exclude non owner dentists. When I took over the Plan late summer, I did not get this amendment. So I told him he could defer. When I went to do cross testing, I called the attorney who drafted the doc to see if there was any provision to put him in his own group. Yesterday, I saw the amendment to exclude him. I can't find anything in EPCRS to say how to correct this problem. A late amendment is supposed to affect mainly NHCE's. This will affect one HCE, only. Also, EPCRS talks about someone deferring who was not eligible because of age or service or not passing an entry date. I can't find where any excluded class is mentioned.

All I can think of is refund all of the money including gains.

Am I missing something in Rev. Proc. 2008-50 or does anyone know of anything else?

[Jim Chad]

Let's change this question a little.

Going forward, we are amending so non owner dentist is not excluded, so he will get a Th contribution. Does anyone think we can amend now to let him keep the deferrals for 2009 in the Plan? I understand the TH contribution will be required for 2009.

[Tom Poje]

EPCRS can't cover every situation. the examples given are generally the most common, so its probably safe to follow the example provided for someone who was allowed to defer despite age and svc.

and it would be possible to exclude that individual prospectively - that is always possible as well.

[Jim Chad]

Tom: we are looking at retroactively amending the Plan to let one HCE's deferrals, from last year, stay in the Plan. I won't hold you to this, but is it your best guess that the IRS would think this is reasonable?

[Guest Sieve]

I'm not Tom (surprise!), but I don't know why the IRS would have any problem whatsoever allowing you retroactively to bring the HCE into the Plan--after all, it still will have to pass ADP, etc. And, if kept in place, that amendment certainly has the potential to bring in some NHCEs: there may be non-owner dentists who enter the plan who are not yet HCEs based on prior year comp.

[austin3515]

"talks about someone deferring who was not eligible because of age or service or not passing an entry date. I can't find where any excluded class is mentioned. "

If memory serves this provision of EPCRS is in the context of a self-correction. I think what Sieve is saying ??? is that if you submitted this to the IRS under the VCP, they would most likely approve it.

[Guest Sieve]

Yes, that's what I'm saying.

[Jim Chad]

Thank you, everyone.