Volume Submitter Document

[Nassau]

I just received a question from the client, who is on our Volume Submitter Plan document, regarding the FICA max ($106,800) and the IRS Annual Compensation Limit ($245,000). They are currently an integrated plan. They want to know if it is possible to freeze those limits at what they are now, or do they have to let those limits continue to rise as the government raises their rates?

Is there a way to amend their current VS document to include this change, if it is possible?

Or would they need to create a custom plan document to accomodate a limit freeze? I

f it is possible, are their testing implications?

[John Feldt ERPA CPC QPA]

The plan could adopt an amendment that says compensation (for allocation purposes) in excess of $245,000 is excluded. If it so happens that one of the employees affected by this exclusion is an NHCE (yes, that's possible), the plan would have to pass a 414(s) test, or the language could limit the exclusion so it only applies to HCEs. Generally, anything that does not favor HCEs is allowed like this (as long as it does not cut back benefits already accrued). They cannot adopt an amendment that tries to prevent the $245,000 limit from being reduced by future legislative changes.

If the plan wants to adopt an amendment that integrates at a level that is lower in the future than the taxable wage base actually in effect for the year, they can do that, but the excess percent (probably now at 5.7% in your plan) would need to be reduced to a lower excess percent such as 5.4% or 4.3% etc. depending on how much below the current taxable wage base your integration level becomes. See 401(L) for details.