corrective amendment

[Gary]

a profit sharing plan is cross tested.

allocation requirement is last day and 1000 hours.

by providing top heavy and gateway the plan does not pass 401a4.

two employees worked less than 1000 hours but employed on last day so received gateway.

if these two employees receive a higher allocation than plan would pass a4.

under 401a4-11g it appears that the plan can be retroactively amended (before 10/15/2012)

if the plan is amended to provide the specific allocation amounts for the two employees for 2011 it would pass a4.

are there any issues re: above?

i.e. do the two employees need to be provided such allocations for 2012 and 2013?

thanks

[chc93]

When you say "specific allocation amounts", I assume you mean the same percentage as other eligible participants. If so, an -11g amendment to "remove" the 1000 hours requirement for 2011 only but keeping the last day requirement will work. And, you can do this for only the 2011 plan year. We've done a similar thing, but instead of removing the 1000 hours requirement, we removed the last day requirement for the one plan year only.

[Gary]

except that it is not the same percentage for all eligible employees. these two employees will receive a relatively higher allocation. all employees have their own allocation group.

thanks

[cpc0506]

except that it is not the same percentage for all eligible employees. these two employees will receive a relatively higher allocation. all employees have their own allocation group.

thanks

The policy we are adopting in documents that if each participant in our group, there are no requirements for an allocation. That was the employer can choose 0% allocation to those not employed on the last day of the year and/or less than 1000 hours. And if the plan is failing gateway, the employer can give contributions to those who would initially not met the client's policy and there is no need to amend the plan. Is anyone else doing this in their documents?

[chc93]

except that it is not the same percentage for all eligible employees. these two employees will receive a relatively higher allocation. all employees have their own allocation group.

thanks

I still think you need the -11g amendment to remove the 1000 hours requirement first. Then, with each in own group, you can do anything that is non-discriminatory. But, I think there's still the concern that the -11g amendment provides a "vested" benefit... so giving a benefit to a 0% vested participant, who will never be expected to be more than 0% vested, is not good.

And, Kathy's comment above eliminates ever having to do -11g amendments.