Plan audit

[Draper55]

I have a db plan(actually db/dc combo) under audit. The agent is suggesting an amendment is required which would increase the db benefits for two nhces. I strongly disagree with the agent's assertion. Is there any harm in arguing why I think the agent is wrong(in other words is the worst case the IRS will just say we are right and you must amend?).. The plan is a good bit overfunded(350k) so the additional benefits(about 45k in value )would not be a hardship and would not create any current contribution liability but why should the ees get a slight windfall if it is not justified?? It is not really fair to the other ees in the combo..

A second question is whether plan audit related fees are properly payable from the plan or are they settlor type in nature??

thank you for any comments...

[John Feldt ERPA CPC QPA]

Why does the IRS think these NHCEs benefits need to be increased?

If it is to pass 401(a)(26), then prepare your calculations to show the value of the annuity payable at NRA and show that it is "meaningful".

If it's because they believe the plan fails 401(a)(4), then show how 401(a)(4) passes without their requested amendment.

If it's because the plan is terminating and you are trying to allocate all the excess to the owner, then good luck with that.

[Draper55]

it is because the IRS thinks the time before certain participants came into

the plan to satisfy 401(a)(26) must be included in their benefit amounts. Originally

they claimed it was a brf issue under 401(a)(4)..I argued that it was an amount issue

in prior years and had nothing to do with brfs. They dropped that angle and are now saying it

that in switching from the gust(period during which said participants entered the plan) to the egtrra document it is a 411(d)(6) issue which is also incorrect. Unfortunately the attorney who created the GUST document

is no longer around so I am left to defend an historical issue on a 2014 plan year audit.