ADP test and Statutory exclusions
Posted 05 January 2006 - 08:47 PM
Another TPA firm is using Statutory Exclusions in the year in which a previously eligible employee terminates. That is, an employee has been in the plan for several years, but since they worked under 500 hours in the year in which they terminate they are treated as statutory excludibles.
The TPA refers to the statutory excludible regs.
Now I know you can do this BEFORE an employee is required to be in (21/1 etc), but AFTER satisfying the rules?
Willing to learn.
Posted 06 January 2006 - 07:54 AM
when addressing otherwise excludables the 401k regs refers to 1.410(b)-6(b)(3) and 7©(3)
6(b)(3) which refer to code section 410(a)(1). I dont see anything there that refers to 'terminees with less than 500 hours'.
in fact, section 1.410(b)-6(b)(3) says you can't use 410(a)(1)(B) which is a 2-year wait for deferrals for otherwise excludables, so I am not sure how they get around the rule.
Posted 06 January 2006 - 01:37 PM
Posted 06 January 2006 - 02:22 PM
Posted 06 January 2006 - 04:15 PM
C L U E L E S S
people work in this business. Makes you wonder about other types of business.
Posted 06 January 2006 - 04:40 PM
What really scares me is that Andy H might be right.
Does anyone see/get this interpretation from the Pension Outline Book? Regulations?
Conversely - do you see anything that would argue against it? I have to read the sources again to see if any of them say something to the effect 'have never satisfied statutory eligibility'.
Guest_named_Pensions in Paradise_*
Posted 06 January 2006 - 05:38 PM
Posted 09 January 2006 - 07:46 AM
"An otherwise excludable employee is an eligible employee who would not have been an eligible employee if the one year of service and/or age 21 age requirement were imposed"
don't see anything in their about terminees < 500 hours.
I would further add the main argument regarding otherwise excludables is whether the plans entry dates apply (e.g. monthly or whatever) and at the Q and As the IRS has said ok to use the maximum allowed by law (first day of plan year or 6 months after meeting requirements).
once in under maximum exclusion, you are in.
Posted 09 January 2006 - 04:33 PM
Throughout the regulations the words 'satisfied' and 'employees who have not met' keep cropping up. An interesting note is that ONLY plans who permit early entry can avail themselves of this technique according to the regulations. With just this item, I don't see how terminees could possibly get into the test on plans using 21/1 as standard, therefore they cannot get in even if plan uses early entry.
Posted 10 January 2006 - 08:04 AM
so here is what the 'administrator' is trying to say
plan has maximum 1 year wait/age 21.
otherwise excludable option not available for terminee who has performed service for 3 years.
plan has immediately eligibility. therefore otherwise excludable option is available, even for a terminee with 66 years of service like mr. cline.
what would Mr. Spock say....
I think the difference is that otherwise excludable deals with eligibility to enter the plan.
the 500 hours rule deals with eligibiility for an allocation.
Posted 10 January 2006 - 04:47 PM
Posted 10 January 2006 - 07:27 PM
I have seen SOOOOOOO many plans missinterpreting that rule.
Posted 31 January 2006 - 09:15 AM
Age 21/1 month of service - eligible to enroll on next calendar quarter
If employed in December, joins in January, terminates in March, need to be in testing?
If employed in December, joins in January, terminates in May, need to be in testing?
Plan has last day rule to get Match. Thanks in advance.
Posted 31 January 2006 - 09:27 AM
However, should that person reach an entry date they are required to be in the ADP testing. The question is whether they are part of the 'otherwise excludable' group. They are.
My question is on termination AFTER completing 21 and 1 year of service, maybe several years ago.