1.401(a)(4)-11g correction of S.H. plan

[ESOP Guy]

We have a S.H. 401(k) that uses the safe harbor match to meet the safe harbor provisions.

This very small plan has 5 NHCEs and 2 HCEs. It has a last day and 1,000 hour provsion for the P.S. contribution.

2 of the 5 NHCEs worked <1,000 hours, but both have entered the plan in years past.

So the plan fails 410(b) coverage testing. It fails the ratio test and the ABT.

Can this plan do an 11g retro amendement to the PS portion to change the allocation requirements to 900 hours for the 2011 plan year, which would get one of the NHCEs a PS cont, and not mess with either the 2011 or 2012 Safe Harbor election?

If I understand an 11g retro amendment correctly by making it now they would be required to keep the 900 hour requirement through the 2012 plan year, so it seem like either the 2011 or 2012 Safe Harbor election could be at risk.

Thanks.

[ESOP Guy]

bump to top

Any thoughts out there?

[Bird]

We've always picked the names and said "For 2011, Joe Smith gets $xxxx" so it doesn't carry forward to other years.

(Is it top heavy and do(n't) they have to get TH mins?)

[Tom Poje]

check to make sure document doesn't contain fail safe provisions that tells you who exactly to bring into the plan without an -11g.

it is an option, but some people simply check items on the checklist and up with this without realizing it.