Santo Gold Posted February 5, 2021 Share Posted February 5, 2021 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 More sharing options...
EBECatty Posted February 5, 2021 Share Posted February 5, 2021 I did something similar recently, but can't seem to find any of the analysis at the moment. I do recall being comfortable enough that it was defensible, although not perfectly clear, on the theory you mention. Link to comment Share on other sites More sharing options...
Bri Posted February 8, 2021 Share Posted February 8, 2021 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.....) Luke Bailey 1 Link to comment Share on other sites More sharing options...
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