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different entry dates


Guest Wineman
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Guest Wineman

Whether a company can have 4 entry dates into their 401(k) plan and the employees of a newly acquired subsidiary can participate in the plan but with only 2 entry dates? Any potential problems with 401(a)(4) nondiscrimination testing (benefit, right or feature)?

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Guest WBrown

Yes, you would have a potential 401(a)(4) issue using different entry dates for different populations.

You do have the ability to treat the new company and employees as a separate plan for all compliance testing until the end of the plan year following the plan year in which the acquisition occurred, e.g. assuming acquisition in 1999, with calendar plan year, can treat separately until the plan year starting 1/1/2001. If you do exercise this option, it will apply for all compliance testing for the year being tested.

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Guest WBrown

Yes, you would have a potential 401(a)(4) issue using different entry dates for different populations.

You do have the ability to treat the new company and employees as a separate plan for all compliance testing until the end of the plan year following the plan year in which the acquisition occurred, e.g. assuming acquisition in 1999, with calendar plan year, can treat separately until the plan year starting 1/1/2001. If you do exercise this option, it will apply for all compliance testing for the year being tested.

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