Hello all,

I am seeking guidance on setting up a profit sharing plan. The Corporation was formed at the end of 2001 and I am the CEO / sole employee. I do have people working for me but 2 are part time (20 hours a week) and one works right around 1500 hours a year (estimated future work time as in the past the hours averaged 20-30 a week). These persons are employed by a leasing company that I contract with.

How can I set things up to exclude the leased employee(s)? I am happy to be creative and just wish to provide for my retirement.

I do have an extremely aggressive plan through the leasing company where I match 25-50% of leased employee contributions. So its not like I'm real cheap.

Can I make it so that I have immediate 100% vesting and have 2 year eligibility for others but am grandfathered in?

I have a brain freeze from all this stuff. Any guidance and or commentary is greatly appreciated.

Thank you in advance

Regards

You can set your plan up with all of those features. You can also exclude leased employees but I think you might have to bring them back in if you fail coverage testing. I am not 100% sure about this so someone else please comment on the lease employee situation.

In order to exclude leased employees from your plan, the leasing company has to provide for at least a 10% of pay money purchase or profit sharing type of contribution.

I have not seen many leasing companies that provide benefits at that level.

You could not use 2 year eligibility, but "grandfather" yourself. That would be a clear violation of discrimination in benefits, rights and features.

However, if the leased employees don't have much service with you yet, and you have had the company for a few years then you may count past service for eligbility and let yourself in right away.

Can you not exclude a class of employees (i.e. leased employees) as long as you pass 410(B) coverage testing?

You can setup the plan to waive eligibility requirements if you are hired by a date that you can pre-determine for the plan. You can also setup the plan so that everyone hired by the effective date of the plan is fully vested.