Technical Advice Memorandum re Specifically-Named EEs?

[Guest TaxedToDeath]

I have come across various references to a practitioner who obtained favorable technical advice from the IRS National Office on a retroactive corrective amendment under Treasury Regulation Section 1.401(a)(4)-11(g), where the amendment named specific NHCEs and the amount of the additional contribution they would receive in order to correct a failure under IRC 401(a)(4). Apparently, the reasoning by the IRS was that there is nothing in the regulation that prevents the amendment from specifically naming the employees. One of the references I came across indicated that the TAM had not yet been published, and I cannot find an official TAM number. Does anyone know whether this TAM was published? If so, could you post the TAM number?

Thanks!

[GBurns]

What year was the TAM issued?

Which division or region was this TAM issued in?

What are the references that you came across?

I am surprised that you found references which indicated that the TAM exists, but did not give the number.

[Guest TaxedToDeath]

What year was the TAM issued?

Which division or region was this TAM issued in?

What are the references that you came across?

I am surprised that you found references which indicated that the TAM exists, but did not give the number.

1. Not sure when or if it was issued.

2. No idea.

3. Reference indicating TAM would be issued found in 2013 CE presentation "Demystifying Employer Retirement Plans: Pension Overview and Update for Non-Pension Attorneys". Also referenced in ERISA Outline Book.

[masteff]

Perhaps this pdf? Item 7 on page 58: http://www.wickenslaw.com/wp-content/uploads/2013/11/Handout-OSBA-Demystirying-Employer-Retirement-Plans-Dec-2013.pdf I wonder if the writer had a source other than the EOB. I don't have access to the EOB to compare. Given item 8 references 2004, it conceivably could be any time in the past decade or more.

Edit: my guess is it was probably after the issuance of TD 9169 http://www.irs.gov/irb/2005-05_IRB/ar06.html

[Guest TaxedToDeath]

Masteff: Yes that is the 2013 CE information referencing the TAM, but it does not provide an official TAM number or publication date. The EOB discusses the technical advice for several paragraphs in Chapter 9 regarding retroactive correction. I am guessing that if the TAM was published it would have been sometime in the past five years.

[KJohnson]

It didn't seem all that remarkable. If you use an 11(g) amendment to pass coverage I always thought you could add by name if you were passing coverage on ratio percentage. Of course if you were passing coverage by average benefits you couldn't.

It would seem to be the same if you are using the 11(g) to pass 401(a)(4). The requirement of the 11(g) is that the additional corrective contribution also pass coverage standing on its own. And, if you are giving it only to NHCEs you will always pass on ratio percentage--therefore you can name names. All that said, I couldn't find the TAM either.

[MWeddell]

I used RIA Checkpoint to search for a ruling containing "11(g)" and couldn't find it. It seems to me likely that it wasn't published.

[Bird]

It seems to me likely that it wasn't published.

That's what I think. The cited reference says "The IRS National Office noted that it would [my emphasis] issue a technical advice

memorandum permitting a corrective amendment..."

[SavingsRUS]

It didn't seem all that remarkable. If you use an 11(g) amendment to pass coverage I always thought you could add by name if you were passing coverage on ratio percentage. Of course if you were passing coverage by average benefits you couldn't.

It would seem to be the same if you are using the 11(g) to pass 401(a)(4). The requirement of the 11(g) is that the additional corrective contribution also pass coverage standing on its own. And, if you are giving it only to NHCEs you will always pass on ratio percentage--therefore you can name names. All that said, I couldn't find the TAM either.

KJohnson, what about using 11(g) to correct a failed BRF test of a match contribution? The 401(a)(4) regulations require a BRF to be currently available, and state that the current availability test is satisfied if it satisfies 410(b) without regard to 1.410(b)-5. The prohibition on naming specific employees is contained in 1.410(b)-4. If the current availability test for a BRF has to satisfy 410(b), which would include 1.410(b)-4, and it fails to do so, does that mean that a failed BRF test CAN'T use 11(g) to retroactively correct by selecting employees by name? Or are you saying that for a failed test that is a test under 401(a)(4), even the current availability test under 401(a)(4) which requires satisfaction of 410(b), you could name names in the retroactive amendment?

[KJohnson]

It depends on how you are trying to pass. I think you can pass BRF either by ratio percentage (which does not prohibit naming names)or non-discriminatory classification under 1.410-(b)(4) (which prohibits naming names). So if you named names in your 11(g) it wouldn't do you any good if you were trying to pass BRF by the non-discriminatory classification test. On the other hand, if you could pass BRF on the ratio percentage with the amendment then I think you would be fine in naming names both under the BRF testing rules and under 11(g). But, again this is just thinking aloud and I didn't go back and look.

[KJohnson]

So I guess there is two questions does it work under 11(g) and does it work under the test you are trying to satisfy.

Is the upshot that, as to non-discriminatory classification, it works for cross-testing and not for BRF? Under general testing it appears that §1.401(a)(4)-2©(3)(ii) provides that the reasonable classification test is automatically satisfied under §1.410(b)-4(b) if the ratio percentage satisfies the mid-point. No such automatic pass in BRF.

So by naming only NHCE by name you automatically satisfy any 410(b) aspect of 11(g). They can then be used in:

1) Coverage only if you use ratio percentage.

2) BRF only if you use ratio percentage.

3)Cross-testing/general testing--ratio percentage or average benefits.