Timing of Plan Aggregation

[Guest newtobenefits]

Here is an example: A participant participates in 2 plans that must be aggregated under the plan aggregation rules (plan 1 and plan 2). A 409A failure occurs in year X in plan 1 but is not discovered. Years pass and plan 2 is paid out according to its terms. Then the failure is discovered is plan 1 and correction is begun.

Must the plans be aggregated at the time of the failure in year X or at the time of the correction years later?

As a practical matter, to aggreate the plans at the time of the correction is a challenge bc plan 2 has been paid out and is "gone". However to go back and aggregate at the time of the failure seems to be an administrative nightmare.

Thoughts/guidance?

Thanks.

[XTitan]

I read the regs as plan aggregation rules apply at plan inception. Any way you look at it, uncovering 409A issues today that happened pre-distribution is a nightmare whether it's one plan or multiple-yet-aggregated plans.