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I find that figuring out renewals and appropriate credits if you receive the designation mid-cycle is WAY more difficult than the tests...

from a practical point of view? let's say you go with 1 year holdout instead. person works a few years and quits. then rehired. he works the 1 year, thereby becoming re-eligible, but now you have to retroactively enter him in the plan to date of rehire. but when you ran the ADP test last year you didn't include him. in addition, he can't defer on $ from a year ago. The IRS has never answered the question on how to handle such people. in some ways, it is next to impossible to not use rule of parity, at least in a 401k plan. now suppose the plan is not a 401k, but a profit sharing - but to complicate things, it is cross tested. same thing is going to happen. suddenly he is eligible going back a year. talk about tossing a monkey wrench into the works. so just write it into the document: Sorry, if you quit you can not come back to work simply because it will save everyone involved lots of grief.