How long can a failing cross tested plan rely on failsafe allocations?

[AndyH]

I would appreciate opinions on reliance on failsafe provisions for cross tested plans which do not pass 401(a)(4) without failsafe allocations.

I am aware than the IRS is often requiring failsafe provisions to be removed upon application for FDLs, but many are approved.

Lets assume that a plan is established in 1997, has failsafe provisions, and passes by a reasonable margin. Then several NHCEs terminate, and it fails for two years, and does not appear likely to pass in the future. Is it an option to continue using failsafe allocations, which typically are much cheaper for the client than redesign?

Would there be grounds for disqualification if it is no longer designed so that it projects to pass?

Opinions?

[This message has been edited by AndyH (edited 02-09-2000).]

[This message has been edited by AndyH (edited 02-09-2000).]

[Guest]

I think I would go out on a limb in regard to redesign.

Since you can now 'define' participants into 'classes', you can pretty much set up what amounts to a 'failsafe' plan. (simply allocate more to one class, or less to another)