Is there an exception to the multiple use test for a Plan amendment?

[Lynn Campbell]

When using prior year ADP and ACP, is there any leeway with the multiple use test in the event of an amendment to the Plan increasing the matching contribution? It appears that my HCES will exceed the multiple use rules due to the doubling of the matching contribution in this plan year.

[MWeddell]

No, there is no exception to the multiple use limit for the reason you describe.

The easiest solution is probably to switch to the current year method for 2000. It's widely expected that the SBJPA remedial amendment period will be extended to the end of the 2001 plan year. If so, this means that one may switch back from current year to prior year in 2001. All one has to do is amend the document to record this.

Note that switching back to prior year becomes much less advantageous if one is using QNECs, switching QMACs from the (m) test to the (k) test, or switching elective deferrals from the (k) test to the (m). Tread more carefully if this describes your situation.

Obviously if the client expects to vary the match in future years, the current year testing method will be more suitable to avoid a repeat of your current situation.