General Test for Fiscal Year Contribution in Calendar Year Plan

[Guest kmp52001]

I am completing the 2011 nondiscrimination testing for a calendar year plan. The Plan Sponsor typically provides discretionary nonelective contributions that require a General Test. The plan document defines the contribution period for the discretionary nonelective contribution as the 12-month period ending each June 30th, but, to futher complicate matters, the contribution is actually invested in participants' accounts each payroll period, which appears to be bi-weekly or semi-monthly.

The client decided not to give a discretionary nonelective contribution for the period ending 6/30/12, so for the 2011 testing period, discretionary nonelective contributions were only given from 1/1 - 6/30. The plan is not satisfying the General Test likely because the contributions are only for six months but the compensation is for 12 months.

I found reference in Treas. Reg. Section 1.401(a)(4)-12 defining plan year compensation as IRC Section 414(s) compenstion for the entire plan year or any specified 12-month period ending in the plan year, so I believe I can complete the General Test using compensation for the 12-month period ending 6/30/11, but I cannot find anything confirming if I can also include contributions based on that same time period. Has anyone come across this situation, and if so, how did you handle the General Test?