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Add a PS plan for 2023 to an existing 401k plan with EACA


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Hi

Looking at a takeover and a combo plan design.

Existing plan has deferrals, basic match, EACA and PS.

PS is comp-to-comp with last day rule but no hour requirement so not a good option for combo plans.

I was asked to look into a possible 2023 CB plan addition.

Is it possible to add a new PS only plan and not utilize the existing plan's PS provisions?

Also, as I never worked with EACA, does it affect any combo designs? Do not think but checking.

Thanks

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EACA is for the deferral portion. It makes the plan default for deferrals be an opt out rather than an opt in to start deferrals for each participant. If you are comfortable with other combo arrangements and testing that have CODA /401(k) in them this would be no different. I has more to do with HOW the participants start deferrals than anything else. 

If you are used to only doing combo with PS only + DB , and no deferrals, then you'll want to figure out deferrals in the testing first. 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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Also - for the PS with the last day rule - 

Are you looking at retroactively starting the CB for 2023? If so, I'd want to see an actual testing proposal to see if it works with the last day provision in there. Sometimes you never know. 

If looking at adding the CB for 2024 - well, the last day rule can be amended out, so you'd get maximum flexibility there. And I'd want them to consider swapping out the match for a SH NEC or something else that is better for testing anyhow, but if the existing match is SH, that change can't be until 2025 anyhow, assuming its a calendar based plan year. 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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Hi, thanks for the responses

My question was (it is for retroactively adopting a CB for 2023), can I add a new PS only plan for 2023 with a different allocation and use the new one instead of the existing provisions?

Existing provisions are comp-to-comp

New proposed provision would be everyone in their own group

Is there any anti-cutback issue here?

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What is "comp-to-comp" ? A pro-rata allocation?  

If the existing one is pro-rata with a last day provision, I would say yes, they need a new plan if they want everyone in their own group and no allocation conditions. 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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