Amending Cross-tested Money Purchase Plan - How Often Is Too Often?

[SMB]

(I previously posted a similar query under "Retirement Plans in General". Thought I might generate more response here.)

Want to install a cross-tested MPPP with the understanding that the allocation formula might need to be amended from time to time in response to changing revenue and/or employee demographics. Have seen a number of threads noting the IRS' "dislike" of frequent formula amendments in a MPPP. Does anyone know if this "dislike" has any statutory basis? Has anyone had any experience with the IRS regarding this issue?

[Guest rhp]

Section 1.401(a)(4)-5 addresses plan amendments in the context of discrimination. Also Rev Rul 99-51 was recently issued on the same subject. I personally have not had the IRS raise a question about an MPP being amended frequently.

[Lorraine Dorsa]

There is no definitive answer to your question re "too often."

Under ERISA, benefits/contributions must be "definitely determinable." The IRS has stated at various meetings/seminars that the benefits/contributions in a plan that has its formula amended every year is probably not "definitely determinable" since they change each year.

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