Amending Terminating 401(k) for SBJPA

[Guest jhtobin]

A terminating 401(k) plan does not want to amend to provide for prior year ADP testing and wants to keep the pre SBJPA ADP correction method (leveling). Do we have to provide an amendment with the termination that basically states that we are electing to use provisions already in the plan? This is pretty much what the IRS is asking for with their "sample" ADP amendment.

[Alf]

You shouldn't have to amend the plan to specify that you are making the election. I've been sucessful by simply retaining the pre SBJPA ADP/ACP testing language and mentioning in the response letter to the IRS that no amendment was necessary because the election was made by the plan for that year.

[MWeddell]

The plan may not use the pre-SBJPA correction (leveling) method for plan years beginning after 12/31/1996. Hence, an amendment will be needed for that purpose and any ADP/ACP test refunds should have been computed in compliance with the new law.