current & prior year testing q

[Earl]

Hope this is not too basic, but I have looked and can't find the answer.

Is it true that the ability to switch adp/acp testing from current to prior and prior to current is unlimited until the end of the remedial amend. period? So year 2000 and 2001 are still flexible and only have to eventually be documented.

Thanks!

[Alf]

You can switch from prior to current at any time. Switching from current to prior is limited. Notice 97-1 originally said that a plan using the current method in 1997 can use prior year for 98 without receiving approval from the IRS. Notice 98-1 sets out four situations in which a plan is permitted to change from the current year method to the prior year method. One of these is if the change occurs during the plan's remedial amendment period.

[LCARUSI]

Be careful about 2001.

If you select current year method for 2001, you can't freely select prior year method for 2002, because you will be out of the remedial amendment period in 2002

[Guest SPOT]

Alf,

When you say you can switch from prior to current at any time, does the plan document still have to reflect this? I am working on a plan with a document resatated for GUST effective 1/1/2001. Method of testing is prior. Would the document have to be amended to allow for current year testing in 2001?