SECTION 2. BACKGROUND AND

GENERAL INFORMATION

.01 Rev. Proc. 93–42 provides guidelines for substantiating compliance with the following nondiscrimination requirements: nondiscrimination as to coverage under § 410(b) of the Internal Revenue Code, including the determination of whether an employer operates qualified separate lines of business under § 414(r); nondiscrimination in the amount of contributions or benefits and the current availability of benefits, rights and features under § 401(a)(4); and nondiscrimination with regard to an alternative definition of compensation under § 1.414(s)–1(d)(3) of the Income Tax Regulations.

.02 Rev. Proc. 93–42 allows an employer to use alternative methods for substantiating compliance with the nondiscrimination requirements. Because these methods are intended to demonstrate whether there is a high likelihood that the plan satisfies the nondiscrimination requirements, Rev. Proc. 93–42 provides that the Service will treat a plan as satisfying the nondiscrimination requirements where the employer demonstrates compliance with those alternative methods.

.03 Section 3 of Rev. Proc. 93–42 permits an employer to substantiate compliance with the nondiscrimination requirements on the basis of snapshot testing, that is, on the basis of the employer’s workforce on a single day during the plan year (the ‘‘snapshot day’’), provided that day is reasonably representative of the employer’s work

force and the plan’s coverage throughout the year. The snapshot day selected generally must be consistent from year to year.

.04 Section 4 of Rev. Proc. 93–42 provides a simplified method of determining HCEs for purposes of testing for compliance with the nondiscrimination requirements. An employer that uses this simplified method of determining HCEs may choose also to apply the method on the basis of the employer’s workforce as of a snapshot day. Rev. Proc. 93–42 allows the use of reasonably approximated or projected compensation as part of the simplified method of determining HCEs.

.05 Rev. Proc. 93–12 provides a model amendment and a limited amendment procedure for certain plan sponsors to amend their plans to comply with the requirements of § 401(a)(31), which was added by the Unemployment Compensation Amendments of 1992, Pub. L. 102–318.

.06 Rev. Proc. 93–47 provides a model amendment for certain plan sponsors to amend their plans to reflect the modifications made by Notice 93– 26, 1993–1 C.B. 308, to the 30-day notice requirement under § 1.411(a)– 11(c). .07 Rev. Proc. 94–13, as modified by Rev. Proc. 95–12, provides a model amendment and a limited amendment procedure for certain plan sponsors to amend their plans to comply with the requirements of § 401(a)(17), which was amended by the Omnibus Budget Reconciliation Act of 1993, Pub. L. 103–66 (‘‘OBRA ’93’’).