Early inclusion of ineligible employee

[Dougsbpc]

A 401(k) plan mistakenly allowed one of their ineligible employees to enter the plan and fund salary deferrals. We know the correction for this under SCP is a retroactive amendment allowing just that NHCE to be eligible to make salary deferrals when they did, just for that year.

If this is done, does it automatically then make this otherwise ineligible employee entitled to employer contributions or safe harbor contributions? It would seem that the intent of a corrective amendment is to only correct the plan with respect to what was violated.

Anyone agree or disagree? 

Thanks.

[C. B. Zeller]

What does the retroactive amendment say? Does it say that the employee became a participant solely for elective deferrals or did it say they became eligible for all contributions?

Does the plan document say that all employees who are eligible for deferrals are eligible for safe harbor contributions, or does it impose a minimum service condition to be eligible for safe harbor?

Is the plan top heavy?

[Lou S.]

If the plan is top heavy and you bring them in, they absolutely need a T-H minimum contribution assuming they are employed on the last day of the plan year in which they become a participant.

As for other employer contributions I agree with Zeller, what does the document say and what does the amendment say?