401(a)(26) design failure-how to fix it

[VeryOldMan]

We set up a traditional DB plan--not cash balance-- for a restaurant with 50 employees. We excluded bartenders and service people while covering the chefs, kitchen and dish washers and the vice-presiident of the business.  Though the plan  satisfies 70% coverage RPT and initially met the  40% participation rule, this year the minimum participant count is too low--39.2%. I am unclear how to fix this at minimum cost to client. Can I just cover 1-2 members of one of the excluded groups. Has anyone had this sort of problem and how was it fixed. Appreciate any thoughts on the subject. 

[Bri]

-11g amendment up to 9.5 months after the end of the year.....lets you increase benefits to employees (including those not currently eligible) on a non-discriminatory manner.  So pick an NHCE you like (who's also not terminated already with no vesting in such a new benefit), and bring 'em in.....

[Cloudy]

You could try doing the a26 test using average comp for the annual accrual method, or using the accrued-to-date method, you might get a better result. 

[C. B. Zeller]

Does the plan document address this at all (e.g., a fail-safe provision)?

[VeryOldMan]

No the doc doesn't cover it. 

23 hours ago, Bri said:

-11g amendment up to 9.5 months after the end of the year.....lets you increase benefits to employees (including those not currently eligible) on a non-discriminatory manner.  So pick an NHCE you like (who's also not terminated already with no vesting in such a new benefit), and bring 'em in.....

Is it really that simple? Is there a reg or a direct code reference on this?  Sorry I don't usually have these types of issues. My problem is the plan doc doesn't have the failsafe language that C.B. Zeller referenced, so would have to draft language to do it. We use FIS and I tried checking with them but got nowhere.

[C. B. Zeller]

1.401(a)(26)-7(c) and 1.401(a)(4)-11(g)

[VeryOldMan]

C.B. --thanks a lot, very helpful.

[Bill Presson]

On 8/28/2019 at 2:27 PM, VeryOldMan said:

No the doc doesn't cover it. 

Is it really that simple? Is there a reg or a direct code reference on this?  Sorry I don't usually have these types of issues. My problem is the plan doc doesn't have the failsafe language that C.B. Zeller referenced, so would have to draft language to do it. We use FIS and I tried checking with them but got nowhere.

A little surprised that FIS couldn't provide you with a sample -11(g) amendment.