SCP amendment for early inclusion otherwise ineligible person

[Cynchbeast]

We have a 401(k) that allowed a person to start deferring before he was eligible, and want to retroactively amend for SCP correction. We are unclear as to the form and substance of the amendment:

1. Does the amendment name the specific individual(s) allowed in in error, or to all persons who would meet the amended eligibility criteria? (ex: change from 1 yrs svc to immediate entry is need to make that person eligible; does this apply to him, or to everyone)
2. Does the amendment apply only for those year(s) when ineligible person(s) deferred or prospectively from that time forward?
3. Using SCP, does this amendment have to be submitted to IRS for determination letter?

[Tom Poje]

As for who the amendment has to cover, EPCRS is clear:

Appendix B section 2 .07(3) Early Inclusion of Otherwise Eligible Employee Failure. (a) Plan Amendment Correction Method. The Operational Failure of including an otherwise eligible employee in the plan who either (i) has not completed the plan’s minimum age or service requirements, or (ii) has completed the plan’s minimum age or service requirements but became a participant in the plan on a date earlier than the applicable plan entry date, may be corrected by using the plan amendment correction method set forth in this paragraph. The plan is amended retroactively to change the eligibility or entry date provisions to provide for the inclusion of the ineligible employee to reflect the plan’s actual operations. The amendment may change the eligibility or entry date provisions with respect to only those ineligible employees that were wrongly included, and only to those ineligible employees, provided (i) the amendment satisfies § 401(a) at the time it is adopted, (ii) the amendment would have satisfied § 401(a) had the amendment been adopted at the earlier time when it is effective, and (iii) the employees affected by the amendment are predominantly nonhighly compensated employees.

as to whether a determination letter is required...I think it's clear as mud. in light of the fact they are no longer taking determination letters for individually designed plans, they probably don't really want to bothered with them in regards to this type of correction under EPCRS, but I don't believe they have ever really made that "official", but I could have missed that.

[ERISAAPPLE]

How far back can you go if the operational failure of allowing in employees early was significant? In this plan, everybody (both HCEs and NHCEs) was let in early since 1988.  Does the rule that requires correction of significant failures within two years apply to a correction by plan amendment?    I can read EPCRS both ways.