Jump to content

Different eligibility conditions - discriminatory?


Recommended Posts

I am working with a doctors office and their 401k plan.  They currently have a One year of service/1000 hours eligibility requirement to enter the plan.  However, they would like to change that to 6 months elapsed time requirement for new doctor hires.  The new doctors would not be owners.

If the new doctors make less than $130,000 (2021) and are not HCEs in their first year employment, then there would not be a discrimination issue for 2021, is that correct?

What if in future years their earnings are above the HCE dollar threshold?  Is that something that could be viewed as discriminatory a year or 2 after they are hired?  I would not think so since I think any eligibility discrimination would be applied in the year of hire.  But I wanted to check if that is correct?

Thank you

Link to comment
Share on other sites

Keep an eye out for any other employees (non-doctors) that aren't allowed in under the same 6 month period, of course.  Since 410(b) testing generally uses the lowest eligibility under the plan for everyone, you might inadvertently have a bunch of extra non-benefiters among your NHCEs.  (Blah blah blah disaggregation etc.....)

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...