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Joanne Youn Comments on Cross-Testing Plans

February 25, 2016, Plan Adviser & Plan Sponsor

Caplin & Drysdale's Joanne C. Youn spoke with Plan Adviser and Plan Sponsor on important legal implications employers should consider when cross-testing plans, particularly for older and highly paid employees. For the complete article, please visit Plan Adviser's website and Plan Sponsor's website  

Excerpt taken from the article.

NEXT: How calculations are made.

"These are complicated calculations that we leave to actuaries to perform," says Joanne Youn, an attorney with Caplin & Drysdale in Washington, D.C. "They will tell you what groups to establish and what allocation rates to use," Youn says. "My role is to ensure the plan design and the documents match up, that the cross-testing design conforms to the law and what the plan document can accommodate. Some plans have [additional] limitations on how creative you can be in your plan design."

. . .

Sponsors may also want to consider certain proposed changes to retirement plan non-discrimination requirements that the IRS put forth on January 29, 2016. "They would make it more difficult for plans trying to provide qualified supplemental retirement plan benefits to HCEs," Youn says. Plan sponsors whose plan designs require cross-testing or combined testing under Code 401(a)(4) for their profit-sharing contributions will want to consult their benefit experts about these proposed amendments, she advises.


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